Oral Answers to Questions

DEPARTMENT OF HEALTH

The Secretary of State was asked—

Rehabilitation (Visual Impairment)

David Amess: What the responsibilities of local authorities are to provide rehabilitation services for blind and partially sighted people.

Liam Byrne: Local authorities and the NHS are responsible for providing rehabilitation services for the visually impaired that are based on need. We have increased investment in both to ensure that commissioners have more money over the next two years with which to develop services.

David Amess: In a written answer to me on 28 November last year the Minister said that it was the responsibility of local health and social care bodies to commission facilities according to local needs. As he will know, Guide Dogs for the Blind conducted a survey which showed that 20 per cent. of such bodies did not provide rehabilitation services because of lack of funds and lack of qualified staff. Will he please do all that he can to deal with that?

Liam Byrne: The hon. Gentleman is the secretary of the all-party parliamentary group on eye health and visual impairment, and has done a great deal to draw attention to the issues. I think there is consensus in all parts of the House that local communities are best placed to design the shape of services, but we made it clear in a recent White Paper that the director of adult social services will need to undertake a strategic assessment of local needs. Given that more than 300,000 people in the country are blind or visually impaired, we expect their needs to be given prominence in the plans.

John Baron: Despite what the Minister says, the fact remains that, as we have heard from my hon. Friend the Member for Southend, West (Mr. Amess), some local authorities are simply not providing essential services. Given that Guide Dogs for the Blind estimates that at least 80,000 people are not receiving any dedicated rehabilitation services just because of where they live, and given that the Minister's Department has even refused to be represented on the Guide Dogs for the Blind project group that is looking into the issue, will the Government stop washing their hands of the problem, and end the postcode lottery by establishing minimum entitlements to care for all blind and partially sighted people so that they can lead more independent lives?

Liam Byrne: We set out clearly the standards that we expect to operate in the national service framework that was published last year. It is incumbent on us to specify the right pathways of care, and we have done that, along with Guide Dogs for the Blind. It is also incumbent on us to ensure that the right level of resources is there, which is why local government is entering its ninth successive year of real-terms increases.
	The Opposition cannot on the one hand say that we should abolish all targets and have some sort of clinical free-for-all, and on the other hand say that there must be some kind of central direction. They cannot have it both ways. What we must do is ensure that the framework is right and the resources are there, and that is exactly what we have done.

Home Oxygen Service

Sandra Gidley: If she will make a statement on recent changes to the domiciliary oxygen service.

Jane Kennedy: The home oxygen service has seen little change since 1948. Patients and health professionals have been pressing for a modernised service for some time. Of the approximately 60,000 patients who use the service, 30,000—the majority of the highly dependent patients—transferred to the new service before 1 February following an agreement between the suppliers.

Sandra Gidley: The Under-Secretary of State for Health, the hon. Member for Don Valley (Caroline Flint), the Minister responsible for public health, is on record as stating that the new oxygen service
	"was always planned to be phased in over a six-month transition period and not 'suddenly switched'."
	Will the Minister confirm that if the new oxygen regulations had been in force as planned, doctors would not have been allowed to write prescriptions after 1 February and pharmacists would not have been able to supply according to those prescriptions? They would not have been able to bail the system out as they have, in effect saving lives. Will the Minister acknowledge that an administrative blunder has actually eased the situation?

Jane Kennedy: It is a shame that the hon. Lady added that last point. I very much appreciate the way in which community pharmacists, in particular, have worked with primary care trusts to deal with the problems that occurred during the first few weeks of the new service. As for the first part of the hon. Lady's question, if we phased in the service we clearly had to phase in the way in which we managed patients—exactly the way in which we have managed the 30,000 patients who are the most dependent of all. Obviously we must ensure that the oxygen service gives each patient the service that he or she requires, and that is why, when it is operating fully, the new service will prove very effective indeed.

Linda Riordan: Is the Minister aware that, in west Yorkshire, Air Products, which was contracted to supply home oxygen from 1 February, has failed to do so, leaving patients high and dry? Local pharmacists who have lost their contracts with Air Products are kindly supplying the much-needed oxygen and keeping hospital admissions down. Will the Minister explain why the system has been changed, given that it was working so well before?

Jane Kennedy: The system was not working well. Only 55 per cent. of pharmacies supplied oxygen cylinders. Supplies were delivered to the most dependent patients by other suppliers. This is not a process of privatisation; it will deliver a better service to patients—precisely the service that patients and health care providers have been asking us to deliver.

Andrew Rosindell: Does the Minister not accept that the system that her Government have imposed simply is not working? Many of my constituents are suffering as a result, as are constituents of my hon. Friend the Member for Hornchurch (James Brokenshire). Many of the patients of Mr. Tariq Mahood, a pharmacist in the Mims pharmacy in North street, Romford, have not had the oxygen that they desperately need. Will the Government please review this policy as a matter of urgency?

Jane Kennedy: We have been doing that, and I followed the operation of the new service not only from 1 February but during the weeks beforehand. We have seen a surge in the number of general practitioner orders for patients with continuous or long-term needs, and it is not yet clear precisely why that has happened. There could be a number of reasons, including GPs reviewing the number of patients using high volumes of cylinder oxygen, or people beginning to exercise choice across the wider range of services now available. We are working closely with primary care trusts, GPs and patients to ensure that patients receive precisely the service that they need. As I have said, I am grateful for the way in which pharmacies and PCTs have co-operated with suppliers to ensure that these early problems with the service are ironed out very quickly.

Phyllis Starkey: One of my constituents has experienced the problem of oxygen cylinders that delivered the previously prescribed speed of oxygen no longer being available. That has prevented him from going to a day care centre, which is not willing to cope with the potential medical crisis. Might not such problems have been avoided if the scheme had been piloted? That way, they could have been identified in just one area and the lessons learned before the scheme was rolled out across the country.

Jane Kennedy: I am grateful to my hon. Friend for raising the case of her constituent; I will look into the detail of it. Clearly, the intention is to improve the service on offer, not to diminish it. The new service was consulted on extensively and it is a response that we have been planning since 2003. My hon. Friend suggests that we could have piloted it, but as I have said, 30,000 patients went on to it before 1 February and the suppliers have co-operated to ensure delivery. Once we have ironed out the early problems that some patients are experiencing, the new service will prove very popular indeed.

Steve Webb: Back in the middle of January, I challenged the Minister in a written question on the changes to the home oxygen service, making specific reference to the impact on patient safety. Her reply was blandness itself. Does she now accept that the change-over has been botched and that, potentially, lives have been lost? Will she take responsibility?

Jane Kennedy: I congratulate the hon. Gentleman on his re-appointment to the Front Bench as health spokesman. His question was posed in characteristically robust terms, but no, I do not accept that patients' lives are at risk in the way that he describes. As I explained in my earlier answers, I am aware that there have been problems, and we are working very hard to address them. As I have also said, it is important that the new service delivers oxygen to those who need it when they need it. These early problems have come about for a range of reasons, and I anticipate that we will get over them very rapidly.

Andrew Lansley: Does the Minister not understand that this has been a shambles? The position is very simple. She says that there are many reasons for the problems, and no doubt she will find many people to blame for the shambles, but the reality is that pharmacists were de-stocking on oxygen cylinders because they expected the contractors to provide them, and GPs believed that they could send orders through to the contractors and did not seem to realise that they should do so only for repeat prescriptions. The net result is that the contractors ended up with thousands of orders that they had no means of prioritising or responding to. The Minister says that she examined the new service beforehand, but as I say, it is a shambles. She should have thanked the pharmacists for bailing the Department out in her first answer to the hon. Member for Romsey (Sandra Gidley), not in her second. She should also say sorry to the patients, pharmacists and GPs who have had to cope with the Department's failed administration.

Jane Kennedy: I have not blamed anyone for the shambles—[Interruption.] Opposition Members should wait for my answer. I have said that there were problems, and that we are working hard to overcome them. As perhaps we should have anticipated, one of the problems was that some patients would ring up to inquire about the new services on offer. We did not have the number of telephone lines that we could have made available had we anticipated those inquiries, and we can learn lessons from that. The suppliers have experienced difficulties in responding to telephone orders, and have increased the number of lines available for dealing with queries. Equally, there have been variations in the amount of details being given as we have changed from using prescriptions to using proper order forms for arranging supplies. The order form requires GPs to give more details than was the case in the past.
	We are learning from all those factors, and we are working with suppliers and the health service to ensure that the service that we deliver is precisely the one that we intend to deliver, and the one that suppliers are committed to delivering in the future.

Colorants

John Leech: What assessment she has made of the level of use of colorants in the manufacture of medicines; and if she will make a statement.

Jane Kennedy: The addition of small levels of colorants to medicines can often be justified as a way of identifying and distinguishing the different types and strengths of a medicine. That can be very important to patients taking several medicines, for example. However, the use of any substance in a medicine, as well as the drug itself, must be justified under EU legislation before it is granted a marketing authorisation.

John Leech: I thank the Minister for that answer. I became interested in this matter when a constituent told me about the difficulty of finding a medicine that did not have a particular colorant. My constituent needed the colorant-free version because of an allergy. However, I was surprised to be told by the Medicines and Healthcare products Regulatory Agency that one reason for the use of colorants was to improve appearance. Given the obvious danger that young children will consume medicines and pills because they think that they are sweets and drinks, and the recent tragic case—

Mr. Deputy Speaker: Order. The hon. Gentleman must sit down when I stand up. Will he now please put his question precisely?

John Leech: I am sorry, Mr. Deputy Speaker. Does the Minister agree that we need to rethink the use of colorants as a way to improve appearance?

Jane Kennedy: I do not accept that that is necessary. The MHRA will investigate any reports of an adverse reaction to a medicine, whether that is due to the colorants or any other additive, or to the medicine's basic ingredients. It will also investigate any reports suggesting that there is a wider problem related to a particular colouring additive that may alter the benefit from the use of that medicine. Any company that wants to use an additive in a medicine has to receive approval for its use. I believe that the system is working pretty well. I shall look at the point raised by the hon. Gentleman, but I do not think that there is any need for a review at the moment.

Access to GPs

Mark Todd: What assessment she has made of access to general practitioners in South Derbyshire.

Patricia Hewitt: I should like to take this opportunity to express my heartfelt thanks to Sir Nigel Crisp, who announced today that he will retire at the end of this month, after more than five years as chief executive of the NHS and permanent secretary at the Department of Health. Under his leadership, there have been record improvements in NHS performance. I want to thank him for that and to congratulate him on his elevation to the other place. I have placed a copy of the full announcement in the Library of the House.
	To turn to the question, in February 2006 the Derbyshire Dales and South Derbyshire primary care trust and the Greater Derby PCT reported that all primary care practices in their areas were able to make an appointment with a GP within two working days, and with a primary care professional within one working day.

Mark Todd: The preface to that answer made me think that Sir Nigel was taking a personal interest in South Derbyshire, and I was saddened by the announcement. How adequate does my right hon. Friend think are the tools to deal with rapid population growth, such as the Swadlincote area has experienced over the past 10 years? There has been a predictable increase in demand for primary care, and many of my roughly 10,000 extra constituents concentrated around Swadlincote often struggle to get registered with a GP. Relying on a local improvement finance trust scheme to deliver that service means that they face a very long wait.

Patricia Hewitt: I understand my hon. Friend's concerns and I am glad to say that in the allocations that we have made and announced for the next two years for primary care trusts we take account as far as we possibly can of anticipated as well as previous population growth. He refers to the new health and social care facilities at Swadlincote, and they will be an enormous improvement in the facilities that are offered to his constituents. I am sure that the local primary care trust, with the additional funding that it will continue to receive over the next few years, will do everything possible to go on improving services for his constituents, as we have been doing.

Business Services Authority

David Taylor: If she will make a statement on progress with the establishment of the Business Services Authority.

Liam Byrne: The Business Services Authority was established in October 2005. It will gain legal status on 1 April when the arm's length bodies that are merging into it are due to be abolished.

David Taylor: It is richly ironic for there to be no published business case for the creation of the Business Services Authority, which has been beset by undue haste, poor advice and wildly optimistic time scales. I extend my sympathies to my hon. Friend on inheriting that mess. Does he agree that the BSA has become an expensive parking bay for the five NHS agencies involved? Has he made any estimate of the cost of that sad and sorry saga so far?

Liam Byrne: Our priority is front-line care, where patients are served, and we are increasing resources at such a rate in the NHS that there is an obligation on us to use the money well. Plans for the BSA have brought together existing ideas for all four separate agencies and I hope to meet hon. Members soon to brief them. I know that my hon. Friend is concerned about one point in particular, and I wish to give him a word of reassurance. Where those plans will have an impact on working people, we will seek views from the Public and Commercial Services Union, Unison and others, because we recognise that they are working hard to protect their members' interests.

Elfyn Llwyd: Will the Minister confirm that the BSA will underwrite all the costs of change and the redundancies inevitable in the transfer and outsourcing? If not, it will hide the true cost of the outsourcing and effectively shift the risk on to the public service, leaving the bidding contractors to cream off the maximum profit. Will he assure the House that that is not the case and will not happen?

Liam Byrne: I assure the hon. Gentleman that no final decisions have been taken, but as the business cases are finalised over the months to come, I can assure him also that if there are transfers of staff, we will observe best practice and ensure TUPE protection for any staff who are transferred. Furthermore, we will follow the joint statement of good practice that was agreed between Government, industry and unions in October last year, which sets out the standards on pay, conditions and service that we all expect to be observed.

Kelvin Hopkins: Apparently, PricewaterhouseCoopers put out a report suggesting that the contracting out of the pension scheme administration would be challenging and pose a degree of business continuity risk. Is not this simply an attempt to privatise, driven by dogma?

Ken Purchase: I think so.

Hon. Members: Answer!

Liam Byrne: One answer or two? As my hon. Friend the Member for Luton, North (Kelvin Hopkins) knows, about 50 per cent. of the Pensions Agency work is already outsourced and, under the terms of that contract, the winning contractor—out of the 33 organisations that bid—has first rights to bid on any expansion of that contract. That bid is under development now and our first assessment will need to be whether that bid is value for money, before it goes any further.

Stephen O'Brien: Without scapegoating strategic health authorities or the as yet non-operational NHS Business Services Authority, will the Minister give a guarantee that, in line with the Government's target, the Department will now stop the deliberate policy of long and damaging delays of due payments to suppliers to the NHS, such as PJ Care Ltd. in Milton Keynes and the Shred Safe Ltd. of St. Neots, which have waited more than 120 days to be paid? Is he not a little embarrassed that NHS trusts, by those unfair means, seek to mask their deficits, which were incurred as a direct result of implementing Government policy?

Liam Byrne: The obligations of everyone in the public sector to pay their bills on time is well set out. If there are instances of that not being observed which the hon. Gentleman wants to bring forward, I will happily look into them.

Clinical Advisory Liaison Services

Tony Baldry: What advice she has given to primary care trusts concerning the setting up of clinical advisory liaison services.

Jane Kennedy: The Department's director of access wrote to all PCT chief executives in July 2005. The letter stated that referrals to community-based clinical assessment services and other such centres should happen only where that adds genuine clinical value for patients.

Tony Baldry: How on earth can it make sense for GPs who have not seen the patient to be paid £60 an hour to second-guess and vet the referral letters of GPs who have seen the patient and who know their patients? How can it make sense for every referral letter from every GP in Oxfordshire to be sent to some central lubyanka in the middle of Oxford in some Stalinist process to be second-guessed? What on earth does that say about the system's confidence in GPs to make appropriate referrals and the integrity of GP commissioning?

Jane Kennedy: The hon. Gentleman opened his question with the phrase, "How on earth". He must be on a different planet, because the description that he just gave is not what I recognise. If he is referring to the concerns that the British Medical Association has raised recently, I should say that even the BMA acknowledges that there is real benefit to be had in a different way of managing referrals, so that the patient goes to the person whom they need, depending on the nature of their complaint.

Dental Services

Linda Gilroy: What recent assessment she has made of the supply of dentists and capacity for dentists' training.

Rosie Winterton: The most recent assessment of dentists' numbers was the 2004 "Report of the Primary Care Dental Workforce Review". Since April 2004, we have recruited the equivalent of an extra 1,100 dentists in the NHS. Last year, we announced that we would increase dental training places by 170 each year, and in January we announced the opening of a new dental school at the Peninsula medical school.

Linda Gilroy: I welcome the resources that my hon. Friend and her Department have found for the new dental school in Plymouth, especially as it will bring 150 jobs and capacity equivalent to about 20 dentists even in the early years. However, does she agree that preventive health care will make the biggest difference to dental treatment and the availability of dental health care to our constituents? Will she urge the new dental school to consider what it can do to drive that agenda forward?

Rosie Winterton: I congratulate my hon. Friend on her assiduousness in pressing for the dental school in her constituency. She is absolutely right to say that that preventive care is extremely important. Not only do we have a public health strategy for oral health, but an important part of the new contract is that it allows dentists to spend time on preventive health care, as well as other treatments.

Paul Beresford: I declare an interest—it is becoming a habit. I am fascinated by the Minister's reply. She will be aware that dental students need academic clinical teachers. Does she agree that the 6 per cent. reduction in the number of academic clinical teachers over the past year could present a problem? Some 20 per cent. of those teachers are over 55, and 33 per cent. of them are aged 45 to 55. Does she agree that we must face the fact that there is a possible problem with a new school, more places and more students, but fewer teachers?

Rosie Winterton: The hon. Gentleman raises an important point, which we have been looking at in relation to the way that we deliver dental training. As well as training to recruit more academics, we can consider other things, such as outreach schools, where students spend more time perfecting their skills in the community, as well as in the school. He is absolutely right to suggest that this issue is important, and I can assure him that we are looking at it.

Paul Truswell: Is not one of the immediate problems about the supply of NHS dentists the fact that those who opt out of the service are writing to patients inviting them to opt into a Denplan contract on a first-come, first-served basis, before those patients know whether there will be any NHS re-provision in the area? Would that not have been prevented if the cut-off date for agreeing the contract had been somewhat earlier?

Rosie Winterton: We had the cut-off date for the contract fit in with the financial year, which also gave the NHS time to prepare for it. My hon. Friend is absolutely right, however, to say that some patients have found the position misleading, which has angered many people in the primary care trusts. The impression has been given that NHS dentistry is not going to continue if a dentist withdraws, but the fact is that the PCT will, under the new system, have money locally. Whether a dentist decides to take up a new contract is up to the dentist, but the primary care trust will re-provide dentistry from elsewhere, and many NHS dentists are coming forward to say that they want to do that where others do not.

Douglas Hogg: Given that NHS dentistry is largely unavailable in Lincolnshire, and given further that there is a precedent for the national health service paying for operations that cannot be performed within it within a stated time, why is the same principle not applied to private dental fees incurred by patients who cannot get NHS dentistry because it is not available? Why, in those circumstances, does not the NHS pay those private dental fees?

Rosie Winterton: Most NHS dentists are, in fact, independent contractors. The NHS contracts with them, and in future that will be done in an improved way. We have had no control: if a dentist left the NHS, there was no way in which the local primary care trust had the money to recommission local dentistry. The reforms that we are introducing change all that.
	I am aware that there are particular problems in Lincolnshire, which has received substantial access money to increase availability. As I have said, however, that money will be available locally. Meanwhile, it would be interesting to know whether purchasing in the way that the right hon. and learned Gentleman outlined is now Conservative party policy.

Dentists' Earnings

Stephen McCabe: What estimate she has made of average earnings of NHS dentists under the new contract; and if she will make a statement.

Rosie Winterton: Under the new contract, a highly committed NHS dentist can expect to earn, on average, around £80,000 per year, with additional money for practice expenses. That will be guaranteed for three years, along with a 5 per cent. reduction in work load.

Stephen McCabe: Eighty thousand plus! Given that figure, is it right for dentists in Birmingham to claim that they are being ripped off by the Government? In some cases, like doorstep cowboys, they have been attempting to blackmail elderly people into purchasing private insurance that they do not need and cannot afford. Surely that is no way for professional people to conduct what is essentially a trade dispute.

Rosie Winterton: My hon. Friend is right to point out that we are offering £80,000, plus practice expenses, guaranteed for three years, and a 5 per cent. reduction in work load—which seems to me to be a fair offer to dentists—as well as introducing a system that will greatly benefit patients. He is quite right, too, to say that many primary care trusts have been worried by some of the information disseminated to patients, which quite frankly has been unnecessarily alarmist. Patients should not feel that they must be driven into private insurance. If a dentist decides not to come with us but to leave theNHS, the money will be available locally to recommission dentistry from other dentists.

Mark Lancaster: I understand why the Minister does not allow dentists to use 0870 telephone numbers, but why has she allowed the practice to persist in the NHS as a whole, particularly for patient hotlines?

Rosie Winterton: I am not sure whether I understand the hon. Gentleman's point. Is he saying that patients have to use a different number to make an appointment? That is not current practice. Most people contact their dentist by ringing an ordinary number.

David Borrow: Does my hon. Friend agree that it is totally unacceptable for dentists who have rejected the contract and who have moved into the private sector to tell elderly patients with false teeth that they must sign up to Denplan, which costs £200 a year? They do not need their teeth cleaned or examined; all they need is access to a dentist when their false teeth need repairing or upgrading.

Rosie Winterton: My hon. Friend is right to say that that practice is unacceptable. We are making changes to the registration of denturists, who can undertake some of the work that he has mentioned; with appropriate training, they can undertake some of those tasks separately, too.

Tim Loughton: Given that the Government are making an offer that dentists apparently cannot refuse, and that the deadline passed at the end of last month, will the Minister tell us whether more NHS dentists will be providing services after 1 April? Has there not been a distinct lack of dentists signing up to the new contract in the Minister's Doncaster constituency? As a result, more patients will pay more for treatment, if they can get it, while dentists who do sign up will be paid less for performing the same work.

Rosie Winterton: All the indications suggest that the vast majority of dentists will sign up to the new contract. As I have said, if dentists do not want to sign up, local primary care trusts now have the money to recommission dentistry.

Tim Loughton: Where from?

Rosie Winterton: Some NHS dentists say that they will expand their lists if other local dentists do not want to sign up. Over and above that, international recruitment has taken place, and 1,000 recruits are going through the international qualifying examination. In addition, there are corporate bodies that want to undertake NHS dentistry. An extra £315 million is going into NHS dentistry compared with two years ago, so we can increase capacity and access for patients. The deal is good for dentists, but, importantly, it is good for patients, too.

Primary Care (West Bromwich, West)

Adrian Bailey: What steps her Department is taking to improve access to primary care services in West Bromwich, West.

Caroline Flint: I am pleased to say that in my hon. Friend's constituency primary care practices report that the number of patients able to see a GP within two working days increased from 73.8 per cent. in June 2002 to 100 per cent. in December 2005. Our recent White Paper, "Our health, our care, our say", looks at ways to develop and extend choice, and to make sure that those reports match patient experience.

Adrian Bailey: Although I recognise the huge improvement in primary care services in my constituency, we are still under-supplied with doctors, who are being helped out by United States accredited physicians' assistants. What is the Minister doing to improve the training, and thereby the number, of British accredited physicians' assistants to help constituencies such as mine?

Caroline Flint: We are expanding training generally, and I shall be happy to write to my hon. Friend on that particular issue. I am pleased to see that his constituency contains two primary care access centres to support GPs, a pharmacy minor ailments scheme that has been developed across Sandwell and two local improvement finance trust schemes, one of which is already open; the other is due to open later this year.

NHS Expenditure

Henry Bellingham: What estimate she has made of the total level of overspending in the NHS in 2005–06.

Patricia Hewitt: The month six forecast was for overspending of £620 million in this financial year. I stress that the majority of NHS hospitals and other organisations are not only improving patient care, but doing so within their increased budgets. As the hon. Gentleman knows, we have already provided additional management support to the small number of organisations with the worst problems, and I am determined to do everything possible to return the NHS to financial balance by the end of the next financial year.

Henry Bellingham: Is the Secretary of State aware that PCTs in Norfolk, Suffolk and Cambridgeshire now face a combined shortfall of almost £100 million? Is it true that hospitals in Norfolk have been told to halt additional sessions, peg operating capacity at current levels and put a brake on making further inroads into waiting lists? The Secretary of State keeps saying that everything in the NHS is perfect, but she should try saying that to consultants and staff who are now closing wards and cancelling operations.

Patricia Hewitt: What I have said on several occasions, both to the House and to the hon. Gentleman when I have met him to discuss the situation in his constituency and the wider area, is that although most NHS institutions are continuing both to improve patient care and to live within their budgets there are serious financial problems in a small number of organisations and in some areas. We are therefore working with the strategic health authorities to do everything possible to ensure not only that we continue to meet our targets—for example, waiting no more than six months for an operation anywhere—but that we deal with the financial problems in that minority of organisations.

Jim Cousins: Will my right hon. Friend bear in mind the position of hospital managers in Newcastle, who are containing spending and growing services against a background of trying to carry out a big PFI project and to cope with money following patients, no certainty about the future structure of commissioning bodies, a big switch of resources away from acute care and into primary care, and the possibility of their application to become a foundation trust being turned down next month because they cannot guarantee long-term stability in their financial base? Will she consider the situation of managers faced with that sort of uncertainty?

Patricia Hewitt: I would like to take the opportunity offered by my hon. Friend's question to pay tribute to the excellent managers whom we are fortunate to have across the national health service. They are helping to ensure that one of the largest and most complex organisations in the world is treating more patients better and faster than ever before. That is due to the superb work of our front-line staff, supported by management and backed up by the investment that we have made.
	I would also like to point out that the tradition over many decades in the NHS has been for overspending in some areas, notably the south and the east of the country, to be matched by underspending in the north. That is not fair, it is not efficient and it cannot continue.

Richard Taylor: Will the Secretary of State tell the House how many trusts have minimised their deficits for this year by one-off brokerage, which cannot be repeated in 2006–07?

Patricia Hewitt: The hon. Gentleman raises an important issue. The sort of informal one-off brokerage to which he refers has been a feature of NHS financial management for the best part of 60 years, and I do not regard it as a good feature of financial management. Part of our work this year and next will be to ensure much greater financial transparency, so that we can both get better services for patients and obtain best value for patients and for public money. I hope that the whole House endorses that aim.

Kevin Barron: Will the overspending in the NHS that my right hon. Friend describes be dealt with by those who overspend, and not by the wider health community?

Patricia Hewitt: My right hon. Friend makes an extremely important point. Unfortunately, the scale of the overspending and the accumulated deficits in a small minority of areas and organisations is such that it is simply not possible for those organisations—or even, in some cases, the wider areas in which they sit—to solve the financial problems on their own. We are working closely with strategic health authorities to put in place the necessary action to ensure that the NHS returns to financial balance at the end of the next financial year.

Robert Key: I support the Secretary of State's requirement that primary care trusts should balance the books and I want that to succeed, but will she ask for a report into the consequences of that for Amblescroft unit at Fountain way in Salisbury, where 12 elderly vulnerable people have been told to leave by the end of April because the unit is being closed, and for the Greencroft centre, where 150 people with mental problems face the closure of the centre, because of the interface with the county council and the provision of social services? A tab of some £2 million has been picked up this year because of overspend in the health service. Much as we might wish to reduce that debt, it has consequences for a small number of the most vulnerable people.

Patricia Hewitt: I will be happy to look at the two specific cases that the hon. Gentleman has raised; perhaps I could write to him on that point. More generally, I stress the point that we made in our recent White Paper that it is absolutely essential in future that we get the social services authority and the primary care trust working much more closely together, with joint care plans, particularly for the most vulnerable people, and, where possible, pooled budgets and joint commissioning.

Rosie Cooper: Will the Secretary of State comment on the difference in the treatment of debt between trusts where brokerage is available and those where the trust debt is treated as in deficit control, and the impact that that might have on the financial recovery of trusts such as Southport and Ormskirk in my constituency?

Patricia Hewitt: Most organisations that at month six predicted an overspend for the end of this financial year have a relatively small problem. With a little extra focus and effort, it should be possible to bring the situation back under control in the very near future. There are, however, other organisations, including particularly the 15 or so where we have appointed additional financial management support—the turnaround directors—where the problems will take longer to resolve. That is why strategic health authorities have the necessary discretion to treat different organisations differently depending on the nature of the problem that they face.

Andrew Lansley: Four months ago, in reply to our debate, the Secretary of State said that she had all the recovery plans in place to deliver a net deficit in the NHS below £200 million this year. Now she says that it is £620 million as at month six, and she simply will not tell the House what her latest figures on months 10 and 11 are telling her. We can see the reality from board papers across the country: the deficit is approaching £800 million.
	I am sure that the House joins the Secretary of State in appreciating Sir Nigel Crisp's contribution to the NHS, not only in his present role as chief executive, but in previous roles. Perhaps he does not yet appreciate to what extent he is going to give a last service to the NHS, or at least to the Secretary of State, by acting as fall guy for the lack of financial control in the NHS. Will the Secretary of State at least have the courtesy to come to the Dispatch Box and tell the House her current estimate of the projected deficit this year, which has caused the Department of Health to send threatening letters to chief executives the length and breadth of the NHS? Will she say now that she will take responsibility for the end-year financial outturn?

Patricia Hewitt: I regret the tone of the hon. Gentleman's comments about Sir Nigel Crisp, who has made an outstanding contribution to the NHS in a variety of roles. I can tell the hon. Gentleman that the £200 million end-year deficit that I told the House last year I hoped that we would be able to achieve looks increasingly unlikely. We are, however, absolutely determined to keep the end-year deficit as low as possible. We are putting all our efforts into working with the strategic health authorities and the individual organisations with the worst problems to ensure that that is the case. As soon as I have the end-year management figures I shall, of course, publish them for the House, as I did last year. I underline the point that I was making: not only are we determined to keep this year's deficit as low as possible, but we are already putting in place the necessary steps to return the service to balance in the next financial year.

Mixed-sex Wards

Tom Brake: How many NHS trusts in England have hospitals with mixed-sex wards.

Caroline Flint: Some 97 per cent. of NHS trusts now provide single-sex accommodation. The Department does not collect information at the level of individual wards. The position of each NHS trust on this matter was published on 26 May 2005 and is available on the Department of Health website and in the Libraries.

Tom Brake: I thank the Minister for her response. Can she say exactly how many trusts are still affected? Can she say also how many patients have been through mixed-sex wards in the past 12 months? Can she comment further on why at Sutton hospital, nine years after the Government made their pledge, the work has still not been completed?

Caroline Flint: I will seek some detailed information, if it is available, on the hon. Gentleman's question. I understand that there are about three places in which there is still some work to be done to do with building. I understand from the strategic health authority that covers his area that work is being completed at the Epsom general hospital and elsewhere. It is hoped that there will be 100 per cent. compliance by the end of this year.

Readmission Rates

Philip Hollobone: What the readmission rate was for in-patients at acute general hospitals in England in the latest period for which information is available.

Liam Byrne: Information is collected only on the number of emergency readmissions, and on a PCT basis. The latest available data for the fourth quarter last year indicates a readmission rate of 6.7 per cent.

Philip Hollobone: I have been contacted by a constituent who writes to say that in order to meet Government targets his daughter, who is a hospital ward manager, has been ordered to discharge patients against her recommendations when they are not ready. Many of these patients have had to be readmitted. Does the Minister share my concern over this news?

Liam Byrne: If that is the case, I would share the hon. Gentleman's concern. I would be pleased if he were to write to me with the specifics so that I could investigate the matter further.

PCT Mergers

Philip Davies: What steps are being taken to maximise public involvement in the merged primary care trusts.

Patricia Hewitt: It is important that public and patient involvement is not only retained but strengthened in the new PCTs. That is why I have been clear that strategic health authorities, when preparing their reports on the local consultations now under way, need to set out how the excellent work of many of the patient and public involvement forums will be safeguarded and developed in the new organisations.

Philip Davies: I thank the Secretary of State for that reply. The merger of PCTs in Bradford will clearly mean a reduction in the number of members of the public directly involved in decision making on health care provision throughout the district. Will the right hon. lady perhaps encourage the new PCT to adopt the excellent example set by the North Bradford PCT in having its own consumer council, which will enable the consumers' voice—the patients' voice—to be heard strongly?

Patricia Hewitt: The hon. Gentleman is right. Where PCTs merge there will be fewer PPI forums in future, but that does not necessarily mean that there will be fewer people involved in them. The work of the consumer council, to which the hon. Gentleman referred, is a good example of the different ways in which it is possible to involve patients and users of services in decisions about how those services are improved in future. Harry Cayton, from within the Department, is leading an expert panel to examine the different ways in which we can promote exactly this sort of user involvement.

Bob Blizzard: Is my right hon. Friend aware that at the public meeting on the reconfiguration of PCTs in my constituency about 300 people were packed into a room, and that there were about 100 or 150 people outside who could not get in? When she comes to evaluate the proposals put to her by the strategic health authority, will she bear in mind the overwhelming volume of public opinion in my area that favours a merger between the Waveney PCT and the Great Yarmouth PCT, which is backed by every strand of medical opinion locally?

Patricia Hewitt: I compliment my hon. Friend, who has made a strong case on behalf of his constituents and the two local PCTs. Of course, the strategic health authority, in evaluating the consultation, will take account of all representations. I will consider the matter extremely carefully when the time comes to make a decision.

Telephone Charges (Hospitals)

Helen Jones: If she will make a statement on charges made to hospital patients for telephone calls.

Liam Byrne: Bedside telephones represent an enhanced service, providing additional choice for patients. Outgoing calls cost 10p per minute. Patients not wishing to use those services, which are made available at no cost to the NHS, remain free to use hospital payphones, as they have always been able to do in the past.

Helen Jones: I am grateful to my hon. Friend for that reply, but what would he say to a constituent of mine, a pensioner, who found that she was being charged 49p per minute to ring to her husband in hospital via Patientline and was forced to listen to a minute of blurb from Patientline before she even got through? It was also costing her husband 20p before he got through to her. Does that not represent an exploitation of vulnerable people? Will the Minister issue some guidance to trusts on negotiating those contracts to ensure that patients are not exploited in this way?

Liam Byrne: My hon. Friend raises an important point, which was highlighted by Ofcom recently. Partly as a result of that report, the Department of Health has set up a review group to explore the issue of costs to users of those systems, including the price of incoming calls. The first meeting of that group is today.

Peter Bone: The hon. Member for Warrington, North (Helen Jones) has raised an important matter, but what she failed to say is that if someone rings Patientline and listens to the two minutes of blurb but the patient is not there, they are still charged 49p a minute. It is outrageous. We do not need a review; we need that stopped.

Liam Byrne: The hon. Gentleman makes an interesting point. However, market research shows that 72 per cent. of patients thought that the system offered good value for money—[Interruption.] As my hon. Friend the Member for Warrington, North (Helen Jones) has pointed out, there are concerns, but it provides a service worth £150 million at no cost to the NHS. However, this is an issue that needs further consideration. That is why the review group has been set up.

Smoking

Meg Hillier: What steps the Government are taking to tackle smoking; and if she will make a statement.

Caroline Flint: A comprehensive tobacco control programme is in place to reduce smoking in England and I am pleased to say that we are making good progress. The current smoking rate—25 per cent. of adults—is the lowest on record, and indicates that the Government are on track to meet the target of 21 per cent. smoking prevalence by 2010.

Meg Hillier: In my constituency good work is going on and the primary care trust is trying to reduce smoking, the incidence of which is unfortunately above the national average with 31 per cent. of men and 25 per cent. of women lighting up. Can my hon. Friend give assurances to people in my constituency who suffer from heart disease and cancer—the two biggest killers in our borough—about the future of cancer and heart services at Barts hospital?

Caroline Flint: Of course we want to show the progress that we have made with cancer and heart treatment, and we want it to continue. However, prevention has an important role, rather than relying on treatment. We know that smoking is a killer. The more we can do to discuss services outside hospitals, and legislation to ban smoking in all enclosed public places, the more we will help with prevention. I hope that my hon. Friend will join me in campaigning in her constituency and elsewhere for prevention as well as treatment.

Anne McIntosh: Will the Minister join my campaign to ban smoking in prisons?

Caroline Flint: As the hon. Lady will be aware—I am sure she has followed the debate closely—some prisons, particularly young offenders institutions, already have a smoke-free policy. As I said during the debate on the Bill, we are in discussion with the Home Office on how we can balance the rights of individuals in their private space with a much more comprehensive smoke-free atmosphere in our prisons, for prisoners and staff. I shall be happy to discuss the issue with the hon. Lady at a later date.

Dental Services

Stephen Crabb: If she will make a statement on NHS dentistry.

Rosie Winterton: In the past two years we have invested an additional £250 million in NHS dentistry, recruited the equivalent of an extra 1,459 dentists and funded an additional 170 training places per year. From April, the NHS will implement major reforms, including devolving commissioning to local level and introducing new contracts for dentists.

Stephen Crabb: Last week, in a debate in the House, Members from across the country expressed concerns about the possible negative impact of the new NHS dental contract. Will the Minister promise to review the new contract if, as many people predict, it leads to a further exodus of dentists from the NHS?

Rosie Winterton: I can assure the hon. Gentleman that all the early indications are that the vast majority of dentists will take up new contracts. None the less, I understand that there are big changes for dentists and I have written today to a number of organisations to announce that I intend to set up an implementation review group to look into how the changes are bedding down so that we can discuss their effects with all involved. However, as I have said, I believe that the deal will be a good one for dentists and for patients.

Betty Williams: Does my hon. Friend agree that the problems in NHS dentistry that we are experiencing in England and Wales are due to the previous contract, and that it needed to be reviewed? Does she agree that the closure of dental schools, too, was a cause of the problems that we face now?

Rosie Winterton: I could not have put it better myself—but I shall try. My hon. Friend is right to say that immense problems were caused by the previous contract, and also by the cut in dental fees that the Conservatives introduced when they were in power. We have had to reverse the damage done by the Conservatives, which is why we are introducing a new contract that will take dentists off the drill-and-fill treadmill and allow them to spend more time with patients, for reasonable remuneration of £80,000 a year for a highly committed NHS dentist in return for a 5 per cent. lower work load, guaranteed for three years. As I said earlier, I believe that the vast majority of dentists will take up the new contract, but where they do not, it is now within the power of PCTs to recommission dentistry from other NHS dentists in the area.

Immigration (Work Permits)

Keith Vaz: To ask the Secretary of State for the Home Department if he will make a statement on the new managed migration points system for work permit holders.

Charles Clarke: I am today publishing the Government's response to the recent consultation on a new points-based system for managed migration. This is being published as "A Points-Based System: Making Migration Work for Britain", and copies are available in the Library.
	I am very pleased to be able to publish our detailed policies for a new managed migration system, which are a result of an intensive consultation process involving face-to-face contact with 1,200 stakeholders, as well as 517 written responses. The United Kingdom needs a world-class migration system to attract the brightest and best from across the world, while being robust against attempted abuse. The new system will give employers and educational institutions a stronger role in the managed migration system, and will introduce a more transparent and objective method of points-based structured decision making, which will significantly improve the quality of decision making and reduce the opportunities for abuse.

Keith Vaz: I thank my right hon. Friend for his statement and welcome the Government's attempts to simplify a complicated system. However, I remain gravely concerned that the new scheme will not address certain skills shortages in some areas—for example, chefs in south Asian restaurants. There are 10,000 south Asian restaurants in Britain, contributing £3.2 billion to the British economy, and there are 20,000 vacancies. The scheme will not address their problems. Today, the Home Secretary has also abolished the sector-based scheme for certain quotas. I welcome his commitment to EU labour markets, but the people coming to the UK under the EU enlargement process take employment in those areas for only a short period and then move on quickly, creating even longer periods for vacancies in the sector. Will my right hon. Friend give the House an assurance that there will be the longest possible transition time, that the scheme will be monitored carefully and that if there are any problems with it he will report them to the House immediately so that a new scheme can be instituted?

Charles Clarke: As the House knows, I very much respect my hon. Friend's contribution on these matters and am keen to agree with him on the best way to introduce our proposals, but I have to say that on this narrow question I do not really agree with the substance of what he says. If there are skills shortages in the catering sector, and I certainly believe that there are—my personal catering adviser, Delia Smith, tells me that we are about 10,000 catering staff short—

David Davis: Is that the right hon. Gentleman personally?

Charles Clarke: No. Personally, I am well looked after from the catering point of view, including in south Asian restaurants in my constituency.
	On a more serious level, there is an important issue to address—skills development for catering. Centres forvocational excellence, including those in my constituency, are doing some strong work on that. The correct route, if there are skills shortages in south Asian catering, is to invest in skills development in that sector. I said so in Leicester some time ago to develop that precise area. We will of course monitor the situation closely, as my hon. Friend suggests, and we will do our best to make sure that if problems arise they are dealt with, which is why the skills base panel will assess the need for skills throughout the sector.

Damian Green: As I live next door to a south Asian restaurant in my constituency, I am tempted to stick to the fairly narrow point made by the hon. Member for Leicester, East (Keith Vaz), but we should widen the discussion. We welcome the principle of a points-based system for economic migration. We have been calling for one for some time because we believe that a firm, fair, controlled immigration system is best for people who want to come here and best for people who already live here.
	The introduction of the new system is an implicit admission that the current system has failed. The Government have no control over our borders and no proper information about the most basic facts and figures. For instance, they thought that about 13,000 people would come here from the new EU member states, but in fact 200,000 come here every year. They also have a history of grand announcements on immigration, such as the plan to remove 30,000 failed asylum seekers a year, which win a day's headlines but are then quietly dropped. I hope that the new system will be an improvement, but I wish to ask the Secretary of State a few helpful questions. First, what is the cost of setting up and running the system—or at least the current Home Office estimate? Does he agree with his predecessor, who said that there was "no obvious upper limit" to immigration into this country? If not, is the new system designed to increase or reduce the numbers coming here to work? Under tier 3 of the system, which applies to low-skilled migration, the document says that there have been concerns that employers should be required to recruit from the domestic labour force first. Do the Government intend to enforce that requirement?
	At the heart of the system is the skills advisory board, which decides how many people can come in under tiers 2 and 3. Why are the Government only considering the skills aspect, which means that other vital factors, such as the increased need for new houses and extra pressures on public services, will not be taken into account? There is no discussion of those absolutely central issues in the document. Why not? We may know the answer to that question. There is much common ground on the principles. We all want a civilised and credible immigration system, but there are serious questions about the plan. We wish it well, and we hope it does not go the way of previous failed Government immigration policies. This country needs a properly controlled immigration system and we will support measures that genuinely bring that about.

Charles Clarke: I am grateful for the hon. Gentleman's best wishes, and I congratulate him on abandoning "Fantasy Island" policies, including withdrawal from the United Nations refugee convention and the absolute ceiling on numbers, both of which were authored by hisright hon. Friend the Member for Witney (Mr.   Cameron) in the Conservative manifesto at the last election. As for the points made by the hon. Gentleman, the cost will be subject to a tendering process, which is exactly the right way for any Government to proceed. As for whether the measure will increase or reduce the number of people, it is important to acknowledge—I think that the hon. Gentleman does so in his article in The Observer—that migration to work and migration to study are important to our economy and society, so we should welcome and encourage them. Illegal migration, however, is not acceptable, which is why the system is in place.
	On the proposal that employers should be required to recruit from the domestic work force first, our straightforward position is that we encourage people to work, both from this country and from the European Union. If people come from outside that area to work, they should do so on the basis of this country's national priorities. It is therefore right to set skills as the top issue. It is because skills are absent in this country that we need to say that we should draw in people with the skills to fill the gaps. That is why the skills advisory board plays an important role. It does not decide what happens in tiers 2 and 3 but, none the less, it is an important advisory board.

Andrew Smith: Can my right hon. Friend say more about the basis and procedure for determining what counts as a skills shortage? In relation to his argument that we ought to be training people in the United Kingdom to fill vacancies, does not that argument apply equally to all areas of skills shortage? Can he therefore give me an assurance that south Asian catering workers—would-be chefs—will be treated no less favourably than anyone else?

Charles Clarke: I can give my right hon. Friend that assurance, and I agree with him completely. We should look at skills in the round, and if there are particular sectors where there are skills shortages, for example, south Asian chefs—I cite that example because our hon. Friend the Member for Leicester, East (Keith Vaz) raised it—that is the area where we need to develop the skills capacity to deal with it. In his role in developing skills in the economy over recent years, my right hon. Friend made a major contribution in that regard. It is precisely because that work has been done that we can, in the document published today, talk about a skills advisory body based on that knowledge, which enables us to take it forward. That is the central issue that we must address, as we will do. It is important that we monitor it throughout because the way in which the skills advisory bodies will work is based on the sector skills councils, each of which has an analysis for its sector of the strengths and weaknesses of labour supply in its part of the economy. That will inform the judgments that are made about migration into the UK and points to be allocated on that basis.

Nicholas Clegg: I, too, on behalf of Liberal Democrat colleagues give a cautious welcome to the announcement. Anything that takes the politics out of the immigration system and introduces a degree of objectivity to a system that has too long been plagued by subjectivity and arbitrary criteria is welcome. However, I have questions about two aspects. If I had been longer in my present position, I would probably have a longer list of question, but as I have not been, my questions are blissfully short. [hon. members: "Oh."] I thought that might elicit a positive response in all parts of the House.
	First, the credibility of the system will necessarily hinge on the operation of the skills advisory board. Could the Home Secretary provide more detail on the composition of the board? An assumption has been made in the past that employers' organisations, trade unions, the public sector and the private sector would all be represented. The composition of the board is essential to ensure the right balance in an assessment of skills. Is it the right hon. Gentleman's expectation that the skills advisory board would try to pin down quotas—a specific quantification—for the skills in each sector? If so, that would have a great effect on the operation of the new system.
	The second aspect on which I seek clarification is the effect that the system will have on the immigration of unskilled labour. If the purpose is to make the immigration of skilled labour more organised, we hope that that will not have an unduly restrictive and punitive effect on sectors that still need unskilled labour. In certain parts of the country fruit pickers are short of unskilled labour and, as we saw in Morecambe Bay last year, excessive amounts of unskilled labour going under the radar would lead to exploitative behaviour by employers.

Charles Clarke: First, I welcome the hon. Gentleman to his role. The longer he is in the role, the shorter his questions will be, in contrast to the way some parties operate. I look forward to working with him.
	On politics and subjectivity, we will never remove politics from this area of national life, but I agree that objectivity and transparency in the system are exceptionally important. The system is intended to raise the quality of decisions. I hope that we can work together to ensure that the national debate on these matters is conducted in constructive and positive terms, rather than in the terms in which it has sometimes been conducted in the past.
	On the hon. Gentleman's particular questions, the skills advisory board will be directly related to the sector skills councils and therefore the Sector Skills Development Agency, which organises and develops those councils. It will also directly involve trade unions and business in a wide variety of sectors that will report directly to the board. I think that many hon. Members are still not fully aware of the developing role of the sector skills councils and the way in which they are drawing in employers, vocational trainers and employees in each area. As they develop their work, they will be able to give detailed assessments of the skills shortages in their sectors. That is unlikely to lead to quotas in the sense of specific numbers, but it is likely to lead to information that will help the system to decide how many points should be allocated to people with particular skills in certain areas.
	That, too, will be the principle on the unskilled labour side, which will particularly inform tier 3 of our five-tier system. It will address the lack of skills in those sectors just as in all the others. As a former Secretary of State for Education and Skills, I would say that the right response to unskilled labour is to develop the quality of our skills training across the whole range.

Gwyneth Dunwoody: Will the Home Secretary, in conjunction with the Secretary of State for Work and Pensions, take a hard look at employment agencies that are recruiting and importing large numbers of workers from eastern European states, exploiting them by charging them for every conceivable service, leaving them with very little of their own money, and suggesting that there is an enormous pool of unskilled jobs to be filled in the United Kingdom? That is not in anyone's interests and does this country's reputation enormous harm.

Charles Clarke: I am rather shocked to say it, but I agree with every word of my hon. Friend's remarks.

Gwyneth Dunwoody: I will not tell anyone.

Charles Clarke: My hon. Friend is notable for her reticence, so I am sure that we can be confident that nobody will discover this unaccustomed level of agreement.
	It has been a scandal in many parts of our national life that people have been able to work illegally in a system where people are drawn in from across the world to work in the most appalling and exploitative circumstances. My hon. Friend is right to say that that needs to be addressed. It was a central theme of the five-year strategy that we published last year. The gangmaster legislation has also been important in this regard, and we have published proposals jointly with the Department of Trade and Industry, the TUC and the CBI. The system is working better now, and we have had a significant number of arrests and convictions in precisely the areas that my hon. Friend describes. However, she is entitled to press still harder to ensure that we enforce the existing law in the most rigorous way. As she suggests, there is still a long way to go.

Tim Boswell: The Home Secretary will be aware of the importance attached by large areas of the agricultural and, in particular, horticultural industries to the role of unskilled seasonal workers in the harvesting of perishable crops. Can he assure me that those arrangements, which have worked successfully under the seasonal agricultural workers scheme, will not be materially affected by his proposals?

Charles Clarke: I cannot give that absolute assurance. I have discussed the matter at length with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs, and we have agreed that by 2010 the scheme that the hon. Gentleman mentions would be wound up and the system that applies everywhere else would be in operation. I can give him the assurance that he seeks until 2010—[Interruption.] I am advised that we will not be in government then, to which I would say, "Wait and see." Beyond that, I can give the hon. Gentleman the assurance that we continue to monitor the situation closely in conjunction with the farming communities and the agricultural industry, and that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs and her colleagues keep it under review.

Diane Abbott: The whole House welcomes the Government's efforts to improve the system and to bear down on abuse. However, I return to the point made by my hon. Friend the Member for Leicester, East. The south Asian restaurant sector, which is only tiny, has the particular problem that even top-quality chefs on the sub-continent are unlikely to have paper qualifications the like of which this scheme turns on. Equally, they are less likely to be in large sector-based organisations to make their case. All that we asking is that the Government pay particular attention to that sector so that our Indian, Thai and Chinese restaurateurs may be assured that the Government understand the significance of their sector and the contribution that they make to the quality of life in our big cities.

Charles Clarke: I can give two assurances. First, the Government understand the importance of the sector. My hon. Friend the Member for Leicester, East gave some important figures about the economic contribution of its members to the economy. It is fair to say that that contribution is not only to our economy, but to the breadth of our society and culture. I therefore give the assurance that my hon. Friend seeks and stress that we will continue to monitor the position closely. The real answer is investment in people in this country to develop their skills. The Government are committed to making that happen.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. May I say to the Home Secretary that I know that he is trying to make eye contact with the questioner, but it means that he loses contact with microphone?

Julian Brazier: The House, I am sure, applauded the Home Secretary's comment about the need, in the first case, to train people locally. In the light of the quadrupling of the number of work permits since the Government took office, from approximately 40,000 a year to about 160,000, will he answer the question of my hon. Friend the Member for Ashford (Damian Green) about what that means for overall numbers?

Charles Clarke: I am delighted to have eye contact with the hon. Gentleman. I cannot and will not answer the question because it derives from a proposition that, somehow, migration to work and study here is undesirable. I do not accept that. If one were to talk to people from many sectors of the economy, they would say that they welcome and need migration. I accept that it is necessary to tackle illegal migration and people who try to evade the system in various ways. The new system is designed to address that. It does not signpost a specific number—up or down—of people who migrate here to work or study. One of the reasons for the country's opposition to Conservative party policy at the general election was that people clearly understood that one could not simply pick some arbitrary number, but that the system had to be run well and effectively. The proposals are designed to achieve that.

Neil Gerrard: The Home Office expects the largest number of people who come here to do so under tier 2. The document states:
	"Applicants will need to have a job offer from an employer who is registered with the Home Office on a list of approved sponsors".
	How will that system of approving sponsors work? One could envisage many small organisations and companies, such as the restaurants that have already been mentioned, wanting to bring in a skilled employee. I hope that the system will be neither bureaucratic nor without an appeal mechanism for someone who is refused inclusion on the list of approved sponsors.

Charles Clarke: I can strongly assure my hon. Friend that the proposal is not intended to be bureaucratic. Indeed, the reverse is true. We want to work in partnership—perhaps a new word for the Home Office in the context that we are considering—with large and small employers and universities, who ask people to come here to study and get much of their business from it, to administer and run the system in a non-bureaucratic way, thus resolving many of the problems of people needing to extend or change matters, sometimes using 80 different lists of migration routes into the country. I give my hon. Friend an absolute assurance that we will guard against a bureaucratic approach and work with large and small employers to make the system work effectively.

John Redwood: Does the Home Secretary accept that there must be some limit on the overall number of economic migrants every year because of the pressure on water resources, transport capacity, housing and land, or will he tell us how those problems can be solved so that we can have unlimited economic migration?

Charles Clarke: A similar argument could be made for limiting by state diktat the number of people born every year. The country will operate on the basis of the number of economically active people who are in this country. Migrants fall into that category and they should and will contribute to the country's economic development, rather than the opposite. I know that the right hon. Gentleman acknowledges that that is the case in general. I hope that he agrees that our focus should be to stamp out abuse of the system rather than simply stopping people migrating here.

George Mudie: Speaking as one who represents an inner-city seat in Leeds, may I offer the Home Secretary a warm welcome for his proposals? I also congratulate the Home Office on the extent of the consultation that has taken place on these measures. In the document, it is suggested that applicants will start at the first tier and move through the tiers. Will the Home Secretary tell the House how long it might take someone to go through that process and finish the scheme? What will happen to applications in the meantime?

Charles Clarke: I am grateful to my hon. Friend for his support. I know that, from his knowledge of Leeds—one of the great cities to have benefited from migration over the years—he will agree with what we are trying to achieve. We envisage a time scale of between 18 months and two years for implementing the whole process. We will simply go through the process stage by stage, steadily implementing the proposals, if they get the support that will enable them to be carried through in every part of the country, as I believe they will.

John Pugh: Does the Home Secretary acknowledge that no sane plan can work unless we curb the activities of illegal gangmasters, snakeheads and organisations such as 14K? Does he also acknowledge that that will require better security and intelligence at our regional ports and airports?

Charles Clarke: The House will be shocked to hear that I agree that the activities of gangmasters and snakeheads are antisocial and should be driven out. The answer to the hon. Gentleman's question is that we will go through this whole approach policing rigorously the system to deal with organised crime. As I said to my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), measures to deal with people trafficking are a central priority in the system, and we shall carry that proposal through.

John McFall: The Governor of the Bank of England, among others, has stated that immigrant labour has been essential to maintaining the buoyancy of our economy. Will the Home Secretary ensure that those workers who come here and make a contribution can stay for as long as possible? Will he also take the opportunity to work with vice-chancellors to ensure that people from China and India who can provide graduate skills can stay here, perhaps using a similar system to the American green card, to make a contribution to our economy?

Charles Clarke: Yes, I can give my right hon. Friend that assurance, provided that the contribution continues to be made. The important thing for everyone who migrates here is that they should continue to make a contribution. Working together with businesses and universities is the best thing for us to do, because they are best able to guarantee that that contribution is being made.

John Greenway: As the Home Secretary knows, the Council of Europe Migration Committee, on which I am happy to serve, is looking at these issues in considerable detail. I warmly welcome what he has said—these are some of the most challenging issues for the Government, and it represents a great step forward that we have all-party consensus on these proposals. I particularly agree with the comments of the hon. Member for Crewe and Nantwich (Mrs.   Dunwoody). Sadly, there is a great deal of evidence of abuse of migrant workers, not only irregular migrants but those who are here legally. Will the Home Secretary give the House an assurance that, across Government, those abuses will not be tolerated, and that these people will be given the welcome that they deserve?

Charles Clarke: First, may I pay my respects to the work that the hon. Gentleman has done in this field? I strongly agree that achieving cross-party consensus on this matter is the best way to proceed, and I am grateful for what he said on that. I can absolutely give him the assurance that he seeks. I had a press briefing earlier today with the TUC and the CBI, both of which are utterly committed, with the Government, to maintaining precisely the civilised standards of employment that are a requirement that should operate for everyone in this country. I acknowledge, as I did to my hon. Friend the Member for Crewe and Nantwich (Mrs Dunwoody), the fact that there remains a great deal of work to be done in this area. However, we are all committed to moving in the same direction.

Gwyn Prosser: I want to add my welcome to the new proposals, not least because they will enable us to crack down on the abuse of the immigration system in this country, just as past and present measures have enabled us to crack down on the abuse of our asylum system. The new proposals will involve the reintroduction of embarkation controls, which the Tories abandoned in 1994. How does my right hon. Friend propose to reintroduce embarkation measures in busy ferry ports such as Dover without interrupting the essential flow of traffic and people?

Charles Clarke: There are two things to say about this. The first is that one of the effects of the scheme will be that it will be much easier to make applications internationally, so that many people seeking to enter the country who might previously have arrived at Dover will not need to go anywhere near it, because they will already know where they stand, the decision having been properly made in the country from which they come. The second, more substantive, answer to my hon. Friend's question is that our e-borders proposals, which we have already published, and the development of biometric documentation will enable us to address these questions at ports such as Dover much more effectively.

Stewart Hosie: I warmly welcome the move to a points-based migration system. Paragraph 111 states that the UK skills advisory body will publish
	"a Scotland-wide Shortage Occupation List."
	Given the recognition of specific problems in Scotland and the comments published by CBI Scotland, would it not make more sense for the Scottish shortage occupation list to be developed fully by the Scottish Parliament? Will the Home Secretary consider that during the passage of any legislation?

Charles Clarke: If the hon. Gentleman is suggesting, as I think he is, that we should change the law to devolve migration issues to Scotland, I am afraid that I cannot agree. We believe, I think rightly, that this is a UK-wide issue. I am glad to say, however, that we are working closely with our colleagues in the Scottish Executive. We consider its fresh talent initiative to be a positive contribution that sits within the frame of the document. However, I think that it would be a grave mistake to establish key labour-market issues simply on a Scotland-England, or indeed a Scotland-England-Wales, basis. It should be done on a UK basis, and we will ensure that that continues.

Phyllis Starkey: I share many of the concerns raised by my hon. Friend the Member for Leicester, East (Keith Vaz), among others, about the effect of the scheme on south Asian restaurants. The Home Secretary seems to be suggesting that the problem will be solved by the provision of more training, but Milton Keynes has a dynamic local economy in which plenty of other jobs are available, providing much more attractive hours and conditions than those in the catering trade. I fear that if the supply of labour from the sub-continent is not allowed to continue many restaurants in my city will close, to the detriment of those in my constituency, including me, who enjoy them as part of a range of restaurants there. Will my right hon. Friend assure me that he will keep the matter under review and will be able to act quickly if the fears raised by my hon. Friend and others prove to be justified?

Charles Clarke: I can certainly give that assurance. As I said in answer to my hon. Friend the Member for Leicester, East (Keith Vaz), we will indeed keep the matter under close review. As I have said, however, what we want in all our productive industry—including the service industry, which involves catering—are high skills, high wages and high productivity. That is what we should seek to achieve, in those sectors as well as others. Individual businesses and shops that keep going on a basis of low skills, low productivity and low pay do not represent the future of this country in the most effective way. That is why I have returned consistently to a central theme of the points-based system, namely, the skills basis for assessment of skills shortages.
	That said, I accept my hon. Friend's point completely. We certainly do not want to cause serious damage to a very important sector of the country's economy and society. That is why we will keep the matter under close review.

Mark Pritchard: Given the new responsibilities that the policy will place on Her Majesty's diplomatic service, will the Home Secretary be having words with his colleagues in the Foreign Office to stop the closure of British diplomatic missions and embassies across the world?

Charles Clarke: We have worked extremely closely with our colleagues in the Foreign Office, and I have discussed the issue with my right hon. Friend the Foreign Secretary on a number of occasions. The main agency, UKvisas, is a Foreign Office agency, but works closely with the Home Office in providing a service throughout the world.
	I was in some north African countries last week, discussing precisely this question. It is possible to outsource some of the work in certain circumstances. It is also possible, by means of the distance approaches established by the points-based system, for many applications to be made online in a very direct way. My answer to the hon. Gentleman's question is yes—we will continue to work closely with the Foreign Office to ensure that the service is available as widely as possible.

Small and Medium-Sized Enterprises (Exemption from Regulation)

Nick Herbert: I beg to move,
	That leave be given to bring in a Bill to exempt small and medium-sized enterprises from regulation; and for connected purposes.
	Small business makes an immense contribution to the economy. Small enterprises—those with fewer than 50 employees—make up over 99 per cent. of all businesses and half all employment. As the economy moves toward higher, value-added activity, the share of it taken by small firms will only grow, so the weight of regulation now pressing on small businesses and hindering their wealth creation is an issue for us all. The Better Regulation Commission has estimated that the total cost of regulation facing the economy is now some £150 billion. The Hampton review found that national regulators alone send out 2.6 million forms a year.
	Inevitably, this burden falls disproportionately on small businesses. Large companies are able to employ people to deal with regulation; small businesses simply do not have that option. Academics from the London School of Economics have found that regulatory costs per employee are five times higher for small firms than for larger ones, that small employers spend five times as many hours per employee dealing with regulation, and that they spend almost 5 per cent. of their annual turnover on compliance. Equally, the Federation of Small Businesses has shown that the administration of pay-as-you-earn costs a business with fewer than five employees £288 per employee per year, yet for a firm with 5,000 employees, the cost is just £5 per employee. The Government's Carter review concluded that
	"there is no doubt that the weight of payroll obligations falls disproportionately on small businesses".
	Other regulations of particular concern to small businesses include the quarterly VAT return, the very frequent inquiry forms from Government Departments and the Office for National Statistics, and the new employment regulations, of which there have been 17 since 1997. The growing weight of regulation strongly suggests that the deregulation efforts of successive Governments have not been sufficient. Over the last two decades, the Enterprise and Deregulation Unit has been replaced by the Better Regulation Task Force, which, in turn, has been replaced by the Better Regulation Commission, but still the red tape has grown. The Regulatory Reform Act 2001 has had less than half the predicted impact; the total cost of regulation has increased by 50 per cent. in less than nine years. The Legislative and Regulatory Reform Bill now before the House does not actually refer to deregulation. My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) tabled an amendment to it proposing
	"specific provision to reduce the regulatory impact on small businesses where appropriate".
	I regret that his amendment did not pass, which helped to persuade me that an entirely new approach is needed.
	My Bill would confront the problem of regulation in three ways. First, it would give Ministers a duty to consider alternatives to, and exemptions from, existing regulations affecting small and medium-sized firms, and a power to create those exemptions. Secondly, because the impact of regulation on microbusinesses—those with nine employees or fewer and an average annual turnover of just £130,000—is particularly disproportionate, the Bill would create a presumption that microbusinesses are exempted from any future regulation. That would protect over 4 million businesses from future regulation. Thirdly, in respect of all future regulations the Bill would impose astatutory requirement to carry out a regulatory impact   assessment—surprisingly, that is not a current requirement—and to consider alternatives to regulation in doing so.
	Many precedents already exist in terms of exempting small businesses from legislation. There are small business exemptions of one kind or another relating to tax and VAT returns, statutory audit requirements, trade union and employee representation, stakeholder pensions and Sunday opening hours. Other developed countries have also adopted the practice of exempting small businesses from regulation. Last year, France deregulated firms with fewer than 20 employees in order to encourage higher youth employment. In Italy and Germany, there are small business exemptions relating to statutory audit requirements, and trade union and employee representation. There are also numerous examples of small business exemptions in many states of the United States of America.
	This idea would be popular with businesses themselves. Last year, a Federation of Small Businesses survey found that 80 per cent. of small businesses support regulatory exemptions for the sector. The federation is in favour of the principle of exempting small businesses from regulation wherever possible, and it is particularly supportive of the idea of placing a duty on Ministers to consider alternatives to regulation. However, it is not just commercial enterprises that would benefit. Small charities, which often rely on voluntary help, find coping with regulation particularly difficult. My right hon. Friend the Member for Witney (Mr. Cameron) has proposed social enterprise zones with lower regulation, in order to assist in the development of the voluntary bodies that can play such an important part in delivering support to our most deprived communities.
	The Bill is a balanced measure that would not automatically abolish existing regulations for small and medium-sized businesses such as those affecting the rights of disabled people in the workplace, or, indeed, other employment rights. It would simply give Ministers a duty to consider alternatives to regulation, and suitable exemptions. They would then have a power to create such exemptions, subject to proper parliamentary approval. Similarly, in relation to microbusinesses, Ministers and Parliament would still be able to override the presumption of exemption from regulation if they so wished.
	The idea of exploring alternatives to regulation is simply to ask whether its benign objectives could be achieved by other means. For example, we should be anxious to maintain strong standards of health and safety, but we should be ready to examine whether they could be achieved through insurance mechanisms for the smallest firms, where the risk to employees is low.
	It might be argued that the Bill would create a disincentive for businesses to expand. The Better Regulation Commission considered that question and concluded that there was little evidence to support it. I believe that we should be looking to reduce the regulatory burden on all businesses, but the disproportionate impact on small businesses justifies special measures to help them.
	The Prime Minister has argued that
	"excessive regulation . . . impairs wealth creation as well as corroding welfare."
	The Chancellor has said that much current regulation is "ridiculous", but words are not enough. As CBI deputy director general John Cridland says in a letter to The Times today,
	"What business asks is that we begin delivering on deregulatory promises from all parties."
	If we are going to be serious about lifting the regulatory burden, a new settlement is needed, creating a presumption of deregulation for the smallest businesses, placing the burden of proof on the regulator, while maintaining proper parliamentary scrutiny of the process. That is the purpose of this Bill.
	Question put and agreed to.
	Bill ordered to be brought in by Nick Herbert, Mr. Richard Benyon, James Brokenshire, Greg Clark, Mr. David Gauke, Mr. Greg Hands, Mr. Adam Holloway, Mr. Nick Hurd, and Mr. Shailesh Vara.

Small and Medium-sized Enterprises (exemption from Regulation)

Nick Herbert accordingly presented a Bill to exempt small and medium-sized enterprises from regulation; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 16 June, and to be printed [Bill 140].

Merchant Shipping (Pollution) Bill [Lords] (Programme)

Stephen Ladyman: I beg to move,
	That the Order of 25th January 2006 (Merchant Shipping (Pollution) Bill [Lords] (Programme)) be varied as follows:
	1. Paragraphs 4 and 5 of the Order shall be omitted.
	2. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of proceedings on the motion for this Order.
	Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on the motion for this Order.
	Given the expedient way that we dealt with this Bill in Committee, I have no doubt that we can do equally well in the two hours that we have allowed for the small number of amendments selected, and the hour for Third Reading.

Julian Brazier: I share the Minister's confidence, but want to put on the record that it is an extraordinary testimony to the Government's control-freak tendencies that we should have a programme motion when there is so little business to get through. However, I do not oppose it.
	Question put and agreed to.

Orders of the Day
	 — 
	Merchant Shipping (Pollution) Bill [Lords]

As amended in the Committee, considered

New Clause 1
	 — 
	Report on breaches of annex vi

'The Secretary of State shall publish and lay before Parliament annually a report listing breaches of Annex VI of the MARPOL Convention that have taken place in United Kingdom waters and the action that was taken in respect of those breaches.'.—[Paul Rowen.]
	Brought up, and read the First time.

Paul Rowen: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 5, in page 3, line 2, clause 2, after 'ships)', insert
	'and any subsequent review of Annex VI agreed by the International Maritime Organisation subject to an order in Council laid before and approved by resolution of each House of Parliament.'.

Paul Rowen: Annex VI of the MARPOL convention extends pollution control of shipping to include air pollution for the first time. Although it is admitted that pollution from ships is small compared with other sources—with 4 per cent. of sulphur dioxide emissions and 7 per cent. of nitrogen oxide emissions—it nevertheless has a significant effect on our environment.
	Aside from the Malacca straits, the waters around the UK are the busiest in the world. It is predicted that by 2020, the size of the merchant fleet will have doubled and the size of ships is steadily increasing. It is also estimated that the provisions contained in the annex will save £3 million a year in damage to buildings and structures from SO 2 emissions, and the reduction in ozone emissions will result in 20 fewer deaths and savings of £26 million a year.
	I am pleased, therefore, to see in the draft copies of the secondary legislation that have been placed in the Library the adoption of the North sea as an SO 2 emission control area. That will involve more stringent controls on sulphur emissions, with a reduction to 1.5 per cent., compared to 4.5 per cent. in other areas. Those controls were discussed and agreed by the Marine Environment Protection Committee at its 53rd session in July 2005. Given past concerns on pollution in the North sea, and the fact that air pollution knows no boundaries, I am pleased to see those limits adopted.
	Some 23 states have already adopted the annex and I hope that more will do so. All UK ships have to have an international air pollution prevention certificate and other ships in UK waters that have adopted the annex must also have one. The purpose of the amendment is to ensure that there is an annual reporting mechanism for breaches of the convention and action is taken. I know that concerns have been expressed in previous debates about flagships that have not adopted the annex, and while I appreciate that we cannot control those breaches, we need to ensure that appropriate action is taken against all ships that have signed up to the agreement but do not meet its controls. The new clause seeks to introduce a regular reporting mechanism so that Members can see what progress is being made in what is a first for shipping—the introduction of controls on air pollution.

Julian Brazier: The official Opposition have little problem with new clause 1. The MARPOL convention is a cornerstone of international maritime regulations and we welcome being provided with more information on it. We should remember that shipping is arguably the greenest method of transport. In ball-park terms, goods going by sea in a typical bulk carrier cause one tenth the emissions of CO 2 of an equivalent crate of goods going by land. Abiding by the MARPOL convention will make that difference even greater.
	The publication of the report will add an incentive to ensure inspections are carried out regularly and will essentially name and shame any offenders. I hope that the convention will also encourage shipping companies to follow the example I gave on Second Reading of P&O's The Pride of Kent—I approve of the name, as I am sure does the Minister, given that he represents South Thanet—which has seen its sulphur emissions slashed to zero and its nitrogen oxide emissions down by four fifths since the introduction of a newly invented water scrubber. The more technology is encouraged in this area, the faster we will see our emissions fall.
	As far as I can tell, the hon. Member for Rochdale (Paul Rowen) has got into a bit of a muddle with amendment No. 5. The intention is to ensure that revisions to the treaty cannot be incorporated without an Order in Council following a debate in the House. That is not, in fact, what the amendment would do.
	The advice that I have been given is that the amendment would allow the Government to amend the treaty without recourse to a full Bill. I see the Minister nods in agreement. When even the Government who proposed the Legislative and Regulatory Reform Bill, which is designed to bypass parliamentary scrutiny on a range of issues, do not require further extra parliamentary powers on this issue, I am strongly disinclined to give such a power. I cannot believe that that is what the hon. Gentleman intended, and I am certain that he will not want to press the amendment to a vote.

Stephen Ladyman: I am grateful to the hon. Member for Rochdale (Paul Rowen) for his interest in the Bill, and I assure him that I understand what he is trying to get at. The Government take every bit as seriously as he does the need to enforce the national legislation that implements the MARPOL convention and its annexes.
	We take any breach of the MARPOL convention very seriously. Of course, when we find that someone has breached the convention, we prosecute them, and information on all successful prosecutions are put on the Maritime and Coastguard Agency's website. What the hon. Gentleman is asking the Government to do in the new clause represents a disproportionate response—we are already doing what he suggests. It would be much more efficient if those people who were interested in such information simply referred to the MCA website, where successful prosecution are always listed. Of course, unsuccessful prosecutions, where they do occur, would not be listed there. However, since 1997, no such prosecution has been unsuccessful. With the reassurance that the information is put in the public domain, that we take all breaches seriously and that we will ensure that they continue to be put in the public domain, I hope that the hon. Gentleman will agree that making another report to Parliament would not be a good use of resources and therefore that he will be happy to withdraw the motion.
	The hon. Member for Canterbury (Mr. Brazier), who is my parliamentary constituency neighbour, was absolutely right about amendment No. 5. I obviously do not know what was in the mind of the hon. Member for Rochdale when he proposed the amendment, but it would make it unnecessary for us to introduce primary legislation to implement any future revision of annex VI of the MARPOL convention. I certainly do not want to quarrel with his aim in any way at all—I certainly would not want that to be done by primary legislation—but he is probably not aware that, by virtue of clause 2, an entry for the protocol that adds annex VI to MARPOL is inserted in the list of agreements covered by section 128(1) of the Merchant Shipping Act 1995. Consequently, the amendment is redundant, because the Bill—in combination with the 1995 Act—will achieve the required effect. I hope therefore that the hon. Gentleman will be happy not to press the amendment to a vote.

Paul Rowen: I should like to respond to a couple of the points that have been made. The Minister rightly says that successful cases are published. My noble Friend Lord Bradshaw quoted some statistics when speaking in the other place to show that there were about 500 instances of pollution from ships in UK waters last year, yet only 10 of them went to court. Obviously, we are dealing with a new issue—airborne emissions, which have not been subject to controls previously. I will happily withdraw the motion, following the Minister's assurance, but in proposing the new clause, I was seeking to ensure that there would be some measurement of the extent of pollution and the number of pollution cases that were successfully brought to a conclusion.
	With regard to amendment No. 5, the National Environment Protection Council at its 53rd session in July last year agreed that there would be a review of the nitrogen oxide technical code of annex VI, with a view to taking account of revisions and improvements in technology, further to reduce emissions from ships, including particulate matter, and to look at extending emission controls to ships adopting fuels alternative to diesel. That will result in a report in 2007, and as the Minister says that he already has the enabling legislation to let a revision be adopted after that report, I am happy to beg to ask leave to withdraw the motion.
	Motion and clause, by leave, withdrawn.

Clause 1
	 — 
	Power to give effect to revisions of the international arrangements relating to compensation for oil pollution from ships

Julian Brazier: I beg to move amendment No. 1, in page 1, line 9, at end insert—
	'(c)   "international agreement" means any agreement adopted by the International Maritime Organisation.'.

Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 2, in page 2, line 26, at end insert—
	'(e)   make such provision only in concordance with an international agreement.'.

Julian Brazier: When the sacred chickens failed to eat their grain and give Appius Claudius Pulcher the omens he desired when commanding the Roman fleet against the Carthaginians, he had them thrown into the sea, proclaiming, "Let them drink if they will not eat." I say that not just to suggest that he might have made a good new Labour Cabinet Minister, but to remind people that discharges of one kind of another go back a long way.
	The amendments are intended to prevent the use of the wide powers delegated to the Minister by Orders in Council under the Bill to incorporate EU directive 2005/35/EC into British law, or indeed to prevent future Governments from having the ability to incorporate into law by secondary legislation any international treaty that does not enjoy the blessing of the International Maritime Organisation.
	There are two issues. First, the directive is highly dangerous to our maritime interests. Secondly, the Conservatives, and much of the shipping industry, from the British Chamber of Shipping to the unions, are strongly opposed to the development of regional agreements instead of proper, IMO-approved international ones. I am aware that the Government are themselves suspicious of the directive, and I am sure that I will receive reassurances in a moment from the Minister that the Government have no intention of adopting it. The amendments are intended to ensure, however, that no future Government—we may have a less maritime-friendly Minister in post at some point—can misuse the term "international agreement" to apply to an agreement between member states of the EU alone.

Philip Hollobone: I am glad my hon. Friend has tabled these amendments. Is not the danger of the EU directive that it introduces the concept of serious negligence? Conservatives believe that people should not be prosecuted for something that they did not intend to do.

Julian Brazier: Indeed. My hon. Friend is exactly right and echoes the lengthy debate we had on that matter in Committee. We are not allowed to cover exactly the same ground on Report, and Mr. Deputy Speaker would rightly restrain me from doing so, but my hon. Friend is right to say that one of the problems with the directive is that it suggests that criminal sanctions should be brought against people guilty neither of intentional discharge nor of reckless disregard in that matter.
	For the benefit of Members unaware of issues behind the amendments, I may say that the European Commission passed the directive last year, and it seeks to criminalise the accidental discharge of oil in the way mentioned by my hon. Friend in cases of "serious negligence". That term is so far undefined in law but major shipping companies fear it will be interpreted strictly, as has already started to happen in France, where it has already been incorporated into law. The consequences of including it in UK law would be grave. Hans van Rooij, president of the International Salvage Union, representing the salvage boats that act as the last line of defence against the kind of catastrophic pollution for which the Bill seeks to compensate, said:
	"If a directive introduces the 'serious negligence' concept, salvers will have no choice but to seek immunity before intervening in the waters of EU states with a reputation for aggressive behaviour in maritime accident situations."
	That is surely an unintended consequence.
	The directive would have a serious negative effect on rescue efforts when ships sink in EU waters and create considerably more pollution in the event of an accident than the Bill will ever prevent. It would also undermine the Government's effort to recruit and retain merchant seamen. Indeed, a joint press release from a coalition of interested parties, which includes the largest cargo and tanker firms, Lloyd's of London and the International Salvage Union, declared:
	"The Directive already has had a detrimental effect on the morale of seamen, and this will have adverse implications for the retention and recruitment of high quality crews."
	The directive is particularly worrying because it involves one region unilaterally making maritime law without reference to the rest of the world, which is our second objection. One of the most impressive changes to the international shipping regime in the past 50 years has been the international nature of the laws and treaties implemented by flag states around the world. There is broad agreement that, if we want to criminalise or discourage certain activities, the correct forum in which to do so is the International Maritime Organisation and that the correct method is a genuinely international treaty.
	The directive affects only the European Union, and consultation has taken place only within the European Union. Both the UK and the European Union are lobbying hard to persuade the United States to stop acting unilaterally and to join major international treaties, but I fear that we would have no credibility in such lobbying if we were to act unilaterally, which is why we support the amendment. We would like reassurance that the Bill cannot be used to slip that unpopular directive or some part of it through the back door.
	We would also like to know whether the only use of the royal prerogative permitted by the Bill is to implement genuinely international treaties—in other words, treaties approved by the IMO.

Stephen Ladyman: indicated assent.

Julian Brazier: I am grateful to the Minister for nodding, but he knows that I must put that point on the record in Hansard. I am aware that he swears that the legislation will not be used to implement the directive, and I believe him, but future Ministers will not necessarily share his scruples in similar situations, and the amendment would make it doubly certain that the porthole is locked and bolted.
	As I said to my hon. Friend the Member for Kettering (Mr. Hollobone), we are not against criminalising intentional discharge. Appius Claudius, to whom I referred earlier, was condemned to death for impiety. However, accidental discharge does not demand punishment or prohibition unless it is the result of deliberate recklessness, which is especially true of punishment or prohibition conducted by one part of the world without reference to the other maritime states. I commend the amendment to the House.

Paul Rowen: Britain has a proud maritime history. We were founder members of the IMO and have played a great part in the IMO's development and the adoption of many of the conventions that we now take for granted. I agree with the hon. Member for Canterbury (Mr. Brazier) that in this particular case an EU directive, which is only a regional agreement, should not be allowed to take the place of any international agreement that may come into force. If there is such an EU directive, it should be subject to normal IMO procedures, which is the soundest way to ensure that unilateralism is not exercised by the US or other states. I hope that the Minister will support the amendment.

Stephen Ladyman: I am always impressed by the ingenuity that hon. Members use to secure an opportunity to make a specific point that is completely irrelevant to the business on the Order Paper. The hon. Member for Canterbury (Mr. Brazier) should be proud of the ingenuity that he has shown on this occasion, but I do not think that he seriously believes that the Government would use the Bill to put the European directive on the statute book. I am fairly sure that he knows that we could not, even if we were minded to do so. However, he has taken the opportunity to make some important points about the failings and weaknesses of the directive, and I share his view on those.
	I assure the hon. Gentleman and the hon. Member for Rochdale (Paul Rowen) that the Government are wholly committed to the IMO and to having maritime agreements agreed internationally. We made that clear during our presidency of the EU in the last six months of 2005, and we are continuing to do so now, as we assist Austria on maritime issues during its presidency—for obvious reasons, Austria's resources in relation to maritime issues are limited. We have made clear our belief that such agreements should only be agreed internationally.
	A few weeks ago, when I attended a ministerial conference in Copenhagen, I found unanimity among the maritime nations of Europe on the necessity of such agreements being not regional, but international. One of the pleasures and honours that I have had in the past 10 months as a Minister has been meeting the Shipping Ministers of pretty much every partner state in the European Union. I have found absolute unanimity on that point—complete agreement that we should not impose restrictions on our European fleet that would make it uncompetitive, that we should seek international agreement wherever possible, and that only in the most extraordinary circumstances should we impose in the Union an agreement that has not been agreed by the rest of the international maritime sector.
	To put our view on the record, the powers in clause 1 are restricted to the implementation of the supplementary fund protocol and the implementation of instruments that revise or replace the civil liability convention, the international oil pollution compensation fund convention, or the supplementary fund protocol. Each of those instruments was adopted through the IMO and it is inconceivable that they would be amended other than through the IMO. There is therefore no need for the suggested definition of an international agreement in amendment No. 1.
	Amendment No. 2 would provide that an Order in Council would only make provision in accordance with an international agreement. Combined with amendment No.   1, that would mean an international agreement adopted by the IMO. I hope that I have already made it clear that there is no scope in clause 1 to give effect to anything other than an international agreement and that such agreements will inevitably be adopted by the IMO.
	I hope that I have given the hon. Member for Canterbury the specific reassurance that he seeks. More generally, I assure him that I share his concern that the European maritime sector should remain competitive and that maritime issues should be dealt with through the IMO and not unilaterally.

Julian Brazier: I am happy to beg to ask leave to withdraw the amendment.
	Amendment, by leave, withdrawn.
	Order for Third Reading read.

Stephen Ladyman: I beg to move, That the Bill be now read the Third time.
	I thank the House and the Opposition parties for the constructive and helpful way in which they have approached the Bill. It was deliberately made a short and focused Bill to speed its passage through Parliament. The whole House agrees that we urgently need the protection of the legislation. Once it is on the statute book, it will improve greatly the compensation available for oil pollution and give us powers to introduce measures to reduce air pollution from ships.
	The international oil pollution compensation fund currently provides up to £168 million of compensation, but, unfortunately, in the case of major incidents such as the Prestige, that amount is not always sufficient. During our consideration of the Bill, the hon. Members for Canterbury (Mr. Brazier) and for Scarborough and Whitby (Mr. Goodwill), for example, noted that compensation payments in respect of the Prestige were for a long time limited to just 15 per cent. of the amount claimed. The IOPC funds have now arranged for payments to be increased to about 30 per cent. of the amount claimed, but, unfortunately, there is no more money available and we know that those claims will never be paid in full.
	Even when the overall costs of an incident do not exceed the limit of the IOPC fund, full payment of claims has often been delayed until the full extent of the damage is known and the final costs of an incident can be accurately assessed. Depending on the incident, that process could take months or even years. We experienced such delays following both the Braer and the Sea Empress incidents. With the Bill, I hope that we will not have to face such a situation again.
	In Committee, my hon. Friend the Member for Great Yarmouth (Mr. Wright) drew our attention to an incident that occurred some years ago. The Eleni V ran aground in May 1978, spilling 5,000 tonnes of persistent oil, which affected shellfish areas and recreational beaches. I understand that the local authorities incurred considerable costs in responding to the incident and payment of compensation was delayed for three or four years. The IOPC fund entered into force five months after the incident. Had it been in force, I suspect that those claims would have been settled much more quickly. That incident demonstrates the importance of implementing such instruments as quickly as practicable. A delay of months, or just weeks, can have serious consequences, so I am grateful for the support and co-operation that we have received from both sides of the House as the Bill has progressed.
	The Government intend to accede to the protocol as soon as possible. We have drafted the Order in Council that will be used to implement the supplementary fund protocol under clause 1. An advanced draft of the Order in Council was sent to all Members who attended Second Reading. Copies were also placed in the Library. The draft order is now undergoing final checks, which will be completed in the very near future so that the order is ready by the time that the Bill receives Royal Assent. I repeat my grateful thanks to the House for its co-operation and commend the Bill's Third Reading to the House.

Julian Brazier: I, too, am pleased that we are reaching the end of the legislative process for the Bill and I, in turn, congratulate the Minister on the way in which he has handled the proceedings. He was always open with us in Committee and during the earlier stages. Like any good mariner after a long voyage, I am pleased to see the lighthouse ahead and know that the journey is nearly over—and that we have not had any spillage during the process, accidental or otherwise.
	Without wishing to introduce a sour note, it is a pity that we have missed another opportunity to slip the Harbours Bill into port as well. It is uncontentious and both sides would have welcomed it. I hope that we will hear from the Minister shortly that the Government intend to schedule a little time for it. That said, it is important that the Bill is passed into law as soon as possible, and I am delighted to hear that that will happen. The crash in the Suez canal just last week involving a Liberian tanker—it was a relatively small affair compared with the incident that the Minister mentioned, but, nevertheless, involved the spillage of 3,000 tonnes of crude oil—emphasises the urgency of the matter.
	The two treaties ratified by the Bill are the product of many years of careful negotiating. They have been agreed by the International Maritime Organisation and, although one is not compulsory, have the blessing of the   international community as a whole. For the international law of the seas properly to work, it is essential that all such treaties are agreed to at as wide an international level as possible and that regions do not splinter off and agree their own rules, as we discussed earlier in relation to the amendments. I was glad to receive the assurances from the Minister.
	There are some areas in which the Government could have been proactive. We hope that there will be a little action before long on getting the large shipping registers to sign up to the supplementary fund protocol, which is the main subject of the Bill and something on which we spent time in Committee.
	Conservative Members are pleased that the Government have heeded the calls that we made in Committee and those of environment groups such as the Royal Society for the Protection of Birds for the introduction of marine environmental high-risk areas, which were recommended 13 years ago by Lord Donaldson. It is one thing to use supplementary funds to provide compensation after an oil spill, but it is much better to prevent a spill in the first place, especially in sensitive areas. Redirecting ships away from areas of outstanding beauty or environmental significance is a sensible way of achieving that.
	I disappointed that the announcement on the MEHRAs made them merely advisory. I hope that the Government intend to consult relevant interested parties and, after a suitable period, find out how well the scheme is working. Given the effort that was put into establishing the areas, it would be a tragedy if they were simply ignored by the ships that were most likely to cause a disaster.
	Putting those small points aside, I am pleased to support the Bill. The statistics that have been cited throughout our debates need no repeating. Although major oil spills are thankfully very rare, when they do happen they cause untold and often irreversible damage to the environment, wildlife and economy of an affected area. The supplementary fund will of course be used very rarely, but when it is used, it will be needed precisely because the scale of the disaster will be so big.
	The incorporation of the latest stage of the MARPOL convention into British law will reduce emissions from ships, especially harmful nitrous oxides. That will make what is already the cleanest major form of transportation even cleaner and help the UK to hit its emissions targets.
	The Government have had the support of the Opposition throughout the Bill's passage. I commend the Bill to the House, and, once again, urge the Government to find time for consideration of the Harbours Bill.

Paul Rowen: On behalf of the Liberal Democrats, I am pleased to support the Bill. I commend the work of the Minister in Committee and on the Floor of the House. Although the Bill is short, it will have an important and wide-reaching effect because it ratifies two important treaties and agreements on oil pollution and controls on air pollution by ships, which are being introduced for the first time.
	The catalyst for the first aspect of the Bill was the Prestige disaster, and we heard in Committee about its catastrophic effect. Some 64,000 tonnes of oil were spilled and there was a bill of more than $1 billion. Our one worry about the supplementary allowance is that it would not have paid 100 per cent. of the cost of the Prestige disaster, but nevertheless we realise that we have come a long way since the Torrey Canyon disaster in 1967. Remarkable improvements have been made on both the amount of oil spilled each year in international waters and the way in which we have dealt with it. I remember my geology professor, Lord Energlyn, who advised Harold Wilson on how to deal with the Torrey Canyon disaster, talking about the technology used at the time, which included the use of Buccaneer bombers to disperse the oil. The way in which we deal with such disasters and the compensation arrangements available have come a long way since then. We support the provisions of the Bill that will help people much more than was the case in the past.
	There are still legitimate worries about flags of convenience and the state of such fleets. It is estimated that at least one in 12 vessels that visit British ports are unseaworthy and that the figures for other ports are much higher. Nevertheless, with continuing pressure, more states will ratify the agreement. It is to be hoped that that will reduce some of the consequences that we had with the Prestige disaster.
	I move on to the MARPOL index. It is a start in dealing for the first time with air pollution. It is limited, and the number of signatures to the convention is low. Like the hon. Member for Canterbury (Mr. Brazier), we look forward to hearing what the Government will do with regard to the ports Bill. We would have liked to see an opportunity to tackle air pollution of ships while in port. That is called cold ironing, and it already operates in Los Angeles and Vancouver. When the Bill is introduced, we hope to have an opportunity to consider that process as going one stage further in dealing with pollution, not only on the high seas but within UK ports.
	I commend the Bill to the House in recognition of the work that will be done under its provisions.

Philip Hollobone: I welcome the Bill. As the Minister said, a sharpened focus is no bad thing. Perhaps other Departments could draw a lesson from the way in which the Bill made its passage through Parliament. It chimes with the environmental concern of our times and, if it makes our planet a healthier place, that must be a good thing. I have enjoyed listening to the debates on the Bill. Perhaps for the first time in my brief time in the House, I can say that this is a Bill that I can wholeheartedly support.
	Question put and agreed to.
	Bill accordingly read the Third time and passed.

EU Financial Management

[Relevant documents: The Fifth, Sixth, Tenth, Eleventh, Fifteenth and Eighteenth Reports from the European Scrutiny Committee, Session 2005–06; European Union Document No. 10326/05, Commission Communication on a roadmap to an integrated internal control framework; Report of the European Anti-Fraud Office: Supplementary activity report for the year 2004; European Union Document No. 5509/06 and Addendum 1, Communication Action Plan towards an Integrated Internal Control Framework.

Ivan Lewis: I beg to move,
	That this House takes note of European Union Documents No. OJ C 301, the European Court of Auditors 2004 Annual Report; No. 11216/05, European Court of Auditors Special Report No. 1/2005 concerning the management of the European Anti-Fraud Office; No. 11452/05 and Addenda 1 and 2, Protection of the financial interests of the Communities: fight against fraud, Commission's annual report 2004; No. 12493/05 and Addendum 1, Commission Report: follow-up to 2003 Discharge Decisions–Council recommendations; No. 12494/05 and Addendum 1, Commission Report: follow-up to 2003 Discharge Decisions–European Parliament Resolutions; No. 12712/05, Commission Staff Working Document: follow-up to the 2003 European Court of Auditors Annual Report; and No. 13532/05, Member States' replies to the Court of Auditors 2003 Annual Report; and supports the Government's promotion of measures to improve the level of assurance given on the Community budget.
	I am pleased that we can have this debate on the report and other relevant documents that are before us for the first time in a long time. It is an indication of how importantly Parliament regards EU financial management and the protection of EU taxpayers' financial interests. I heard a rumour that the hon. Member for Stone (Mr. Cash) is on his way to join us in the Chamber. I advise all Members that if we can make the debate snappy, we may have half a chance of an early night. However, the purpose of the debate is to secure transparency and scrutiny, even if we have to listen to the hon. Gentleman. It will be interesting to see whether he reflects the new Conservative party's movement to the centre, certainly in terms of domestic policy, and in terms of the EU moving ever further to the right. It is an interesting development and one in which we shall see whether the debate reflects where the Conservative party is at the moment on the EU.
	I shall cover three areas in my opening remarks. First, I shall set out the main points that are presented in the various reports that are tabled for debate and the Government's response to these various issues. Secondly, I shall highlight what has been done to address problems identified previously and debated in the House. Thirdly, I will set out what we see as the key next steps.
	There have been, and continue to be, improvements in our view in both the quality of financial management of the EU budget and in financial management information. However, we cannot be complacent or satisfied with the status quo. There is much more for us to do.
	What are the main issues and what are the Government's views on them? The main issues are presented formally in the annual report that is presented by the European Court of Auditors, the ECA, on how the Commission has implemented the Community budget. The ECA has also been required, since 1994 under the treaty on European Union, to give a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions.
	The first part of that statement of assurance has always been positive. The ECA has observed every year that, despite some qualifications, the accounts faithfully reflect the revenue and expenditure for the communities for the year and their financial position at the year end. The qualifications relate to the recording of sundry debtors, assets and liabilities, which the Commission's accounting system was not designed to handle adequately.
	The other half of the statement of assurance concerns the legality and regularity of the underlying transactions. Frankly, that is where the problems lie. But it is not all bad news: the ECA audits revenue, commitments and payments and has always given a positive statement of assurance for revenue and commitments. It is in payments where we find the most difficulties.

William Cash: rose—

Ivan Lewis: I am delighted to give way to the hon. Gentleman, having referred to him earlier in his absence.

William Cash: I have been absent for only the best part of 30 seconds of the Minister's speech, but he seems to have introduced my contribution rapidly.
	Does the Minister agree that the Government's explanatory memorandum states:
	"The reservation is that in the absence of effective internal controls the ECA cannot be certain that transactions relating to the sundry debtors item were properly recorded"?
	For practical purposes, it is clear that the Government believe that the Court of Auditors is right to say that there should not be a discharge because it does not know exactly what is going on.

Ivan Lewis: Yes. The Government's position is reflected in the statement that the hon. Gentlemen read out, and we continue to have that concern. However, as the debate progresses we need to take a balanced judgment on the true situation, how much progress has been made in recent times and what we can hope to achieve in the near future. I do not disagree with his comment.

Ian Davidson: I draw to the Minister's attention that I was motivated to come to this debate when I heard him refer to the absence of the hon. Member for Stone (Mr. Cash). Indeed, I was pacing out to arrive here as quickly as I could when I was overtaken by the right hon. Member for Wokingham (Mr. Redwood), who passed me at a rate of knots. I suggest that the Minister refer to other Members who might be brought into the debate.

Ivan Lewis: Had I known what effect my original reference would have, I might not have referred to the hon. Member for Stone, but I am always delighted to see my hon. Friend the Member for Glasgow, South-West (Mr. Davidson) in the Chamber, as well as the right hon. Member for Wokingham (Mr. Redwood), who has a long track record on these issues and who I am sure will want to contribute.

Philip Hollobone: To put this report in the context of a public limited company, were a plc to announce its annual results and have its accounts qualified, there would be a huge impact on its share price. Yet, the European Union carries on from year to year with no effect, and with no real concern from Her Majesty's Government.

Ivan Lewis: It is a shame that the consensus has broken down. To say that there is no real concern from Her Majesty's Government is unfair nonsense. During the course of our presidency, I, together with others, made this a priority. I agree with the hon. Gentleman that, if he is talking about the credibility of the European Union and the relationship between it and taxpayers in the nation states, the issue is incredibly important. As long as the accounts continue to be qualified, they undermine and damage the credibility of the European Union as an institution. Perhaps the difference between us is that I am unhappy that the credibility and integrity of the European Union are undermined whereas I suspect that Conservative Members and, perhaps, one or two of my hon. Friends, are delighted for this continual undermining of the European Union as an institution to continue. The difference is that I want an improvement in the situation so that we cease to qualify the accounts with the consequence that the relationship between the European Union and taxpayers is improved. We should all share that objective. It is also true that the qualification is not, as it is often explained, largely to do with fraud; it is largely to do with inappropriate accounting methods and the difficulty of monitoring expenditure. I do not make any excuses, but sometimes 100 per cent. of the problem is defined as fraud, which is misleading and inaccurate. I share the reservations of the hon. Gentleman, and as long as the European Union's accounts are qualified, any democratic politician should be concerned. Indeed, anybody who believes in the EU as an institution should be concerned and want the situation changed.

William Cash: In respect of proportionality and in terms of whether a discharge is given, does the Minister agree that the amount of money involved is highly relevant? Does he dispute the fact—I doubt that he will as I have the document here—that, with regard to irregularities in expenditure under the European agricultural guidance and guarantee fund, the total amount for 2004 was €82,064,000 and that on structural measures the amount was no less than €531,744,438 in the same year? Does he agree that that is a considerable sum for irregularities?

Ivan Lewis: Yes. There is no difference between us in respect of the continuing concerns about the inability to give full endorsement of the accounts year on year and about the fact that it still appears to be difficult to monitor expenditure under significant budget headings. That is especially a source of concern for Members who believe that the EU is a positive institution, making a positive contribution to the world. The question is not whether we condemn or criticise, but what action we can take—

William Cash: To find out.

Ivan Lewis: Indeed, but also to improve the situation. As I shall explain, we moved things on during our presidency; we did not solve all the problems but we said that the issue must be given more prominence and importance at Council level. As a result, progress has been made.
	I acknowledged earlier that we had found most problems in respect of payments. In most years, the ECA has been able to give a positive statement of assurance only for administrative payments that were a small part of the budget—about 6 per cent. I am pleased to note that, in the 2004 report, the ECA considers that a substantial part of the agriculture budget—59 per cent.—merits a positive statement of assurance. That is the part managed under the integrated administration and control scheme—IACS—and it amounts to €26 billion from a total agricultural payments budget of €44.3 billion in 2004.

Robert Goodwill: It must be true that none of the funds has been deployed wrongly by the Department for Environment, Food and Rural Affairs this year, because no farmers have received their cheques. No fraud is taking place this year because so far no money has been given to our hard-pressed farmers.

Ivan Lewis: I am sure that the hon. Gentleman has raised that point with my ministerial colleagues in the relevant Department, but if he wants me to look at the situation after the debate I shall be happy to do so and write to him.
	The ECA considers that IACS, where it is properly applied, is effective in limiting the risk of irregularities to an acceptable level. In addition, the 2004 report concludes that pre-accession aid also merits a positive statement of assurance. Taking the large share of agriculture spending, and all pre-accession aid and administration costs, about 35 per cent. of the 2004 budget has been assured by the ECA. As I am sure Members will be at pains to point out, that still leaves a long way to go, but it is an improvement over previous years.

John Redwood: The Minister has a difficult task and I am grateful to him for giving way. The OLAF report shows that the financial impact of cases acknowledged by 31 December 2004 was a massive €5.8 billion, yet figure 27 shows that the office has managed to retrieve only €198 million. Can the Minister give us some idea of how much more might come back? I presume that much more is owed to taxpayers.

Ivan Lewis: I cannot give the right hon. Gentleman a direct answer, but I can attempt to find that information for him. At this stage, I am not in a position to give him a definitive answer, but I am grateful for his expression of sympathy for my responsibility in this debate. I assure him that there was not a queue of Ministers wishing to lead on these matters.
	There have been relative improvements in the 2004 audit, but two thirds of the EU budget does not   meet acceptable standards. The sum involved is about €68 billion, or £46 billion, but honesty and transparency are required, as the true extent of the problem must be defined. Fraud has taken place—I shall comment on that—but there are also errors or irregularities. If the ECA's audit leads it to believe that amounts calculated by member states differ in value by more than 2 per cent. from what it assesses to be the correct figure, it cannot give a positive assurance on that part of the budget. That does not mean that the whole budget sector is subject to error—it is still only a relatively small part. We must be careful, too, to distinguish between irregularities, where payments have been made in contravention of the rules, or where it was not possible to show that the correct procedures have been followed, and fraud, where money has clearly been stolen or used for entirely inappropriate purposes.
	Those issues are examined in detail in the "Fight against Fraud" report that was published by the Commission and which incorporates data from the European anti-fraud office—OLAF—to which the right hon. Member for Wokingham referred. For the first time, in the 2004 report, OLAF has succeeded in identifying the amount of suspected fraud reported in agriculture and the structural funds. The relevant figures were 13 per cent. of the total agriculture irregularities and 17 per cent. of the irregularities in the structural funds.

Angus Robertson: I apologise for missing the start of the debate, which began earlier than I expected. Does the Minister accept that many concerns about irregularities in the budget are the result of action by so-called whistleblowers such as Miss Andreasen, Dorte Schmidt Brown and Jules Muis? Will he comment on how the European Union has dealt with those whistleblowers? Does he believe that the situation will improve, as we depend on such people raising concerns if we are to get to the bottom of issues such as fraud in the EU budget?

Ivan Lewis: I am not going to comment on individual cases. There are different sides to stories about personnel and human resources in any organisation. The hon. Gentleman is right to make the general point that we should welcome the fact that people working in the organisation are willing to expose legitimate material that is being withheld from democratically elected politicians or the public for no good reason. We should only do so, however, if they do not contravene their employment responsibilities as employees of that organisation. There is a fine tradition of people working in organisations who are willing to expose unsavoury practices that the organisation would prefer to leave unexposed.

Ian Davidson: My hon. Friend welcomed whistleblowing provided that it does not contravene employment responsibilities, but is not that the exact argument that the European Union consistently uses to try to hammer whistleblowers into the ground? Does he agree that the true difficulty in the EU is the culture, which is much more about covering up errors than welcoming people who reveal them? Unless we break that culture, the future for whistleblowers is extremely dark.

Ivan Lewis: I agree with much of what my hon. Friend said, but there is also a history of employees in various organisations—not just the European Union— justifying behaviour that represents an unacceptable employment practice by saying that they are fulfilling their wider public duty. That does not always prove to be the case, because people have an axe to grind, a problem with management or their own agenda. All I am saying is that we must be careful not to generalise, without referring to people's responsibility to abide by their contracts of employment. If we do not acknowledge their importance, we may as well not have contracts of employment. However, if people choose to disclose evidence that the European Union is seeking to cover up information that should be in the public domain or be available to democratically elected politicians, that has historically been an important part of getting organisations to face up to the difficulties and challenges confronting them. Ideally, as my hon. Friend suggested, the belief that it was management's responsibility to take these matters seriously would be built into the culture of the Commission and other elements of the European Union. We will be able to improve the credibility of the EU only if we tackle these issues head on—if we are honest about them, rather than pretending that they do not exist or trying to hide them. Ultimately, that will do nothing to enhance the reputation of the EU or the relationship between the EU and the taxpayers of Europe.

Lorely Burt: The Minister speaks about the culture in the European Union and in member states. Does he agree although we have grave concerns about the amount of fraud and other irregularities, the problem is largely that other countries—not necessarily the UK—are not meeting the basic audit standards? That is causing much of the problem. Does the Minister agree that—

Madam Deputy Speaker: Order. The hon. Lady is relatively new, but interventions must be brief.

Ivan Lewis: I agree with the hon. Member for Solihull (Lorely Burt). It is true that much of the problem is connected with the ability, capacity and willingness of nation states to monitor expenditure. That is another reason why the attacks on the European Union or "Brussels" are sometimes inaccurate. In the end, it is a  matter of nation states not fulfilling their responsibilities.
	Later, I shall come to what we were able to do during our presidency to improve the situation. A central part of that is the willingness of nation states to take their responsibilities for monitoring expenditure more seriously than they have done.

Mark Francois: rose—

Peter Bone: rose—

Ivan Lewis: I give way first to the hon. Member for Rayleigh (Mr. Francois), who is on the Front Bench.

Mark Francois: I thank the Economic Secretary for his courtesy in giving way. He was making an argument a few moments ago that, in order to help restore credibility, it is important that the European Union and its institutions should be as transparent as possible about their financial circumstances. No doubt we would all agree with that sentiment. Does he agree in principle that that should also apply to Her Majesty's Treasury in relation to information that it holds about our financial relationship with the EU?

Ivan Lewis: Of course I agree with the statement that we ought to apply those principles to Her Majesty's Treasury. I am not sure where the hon. Gentleman's intervention is leading, though I am sure I will find out later on. The same principles of transparency and openness should apply. In the context of a debate such as this, it is important to state that, in this country, in the political process and the government—not this Government, but the government of the country—we are remarkably free of corruption, compared with many other countries. We parliamentarians and politicians should be proud of that. The way our democratic system works should be a cause for celebration.
	I give way to the hon. Member for Wellingborough (Mr. Bone) and wish him all the best in the World cup.

Peter Bone: I appreciate the Minister's comments. I should perhaps declare an interest as a chartered accountant. I am aware that auditing in this country and in western Europe is of a very high standard, and it is a bit rich to suggest that member states are somehow to blame for the fact that the European Union—this Alice in Wonderland organisation—cannot get its own accounts audited.

Ivan Lewis: I am not sure that there would be universal acclaim for the idea that accountants are the most perfect human beings in the world; indeed, I can hear hissing and booing from the Benches behind me. However, as Economic Secretary to the Treasury, I have to acknowledge—urgently, before I get into serious trouble—that our accountancy standards are very high by any international standards.
	The EU is sometimes presented as "Brussels"—an homogenous institution that spends and accounts for all this money as one entity. That is not true. Much of the expenditure is ultimately filtered through nation states, and much of the difficulty as regards the ongoing qualification of accounts is connected to their inability always to account properly and appropriately for the way in which the money is spent. Frankly, it suits some Conservative Members, and perhaps one or two of my hon. Friends, constantly to use that as a stick with which to beat the concept of the European Union. Many elements of this issue play into that view in the context of the broad debate about the integrity and reputation of the European Union and the fact that a massive gap has opened up between the people of Europe and the EU as an institution.

Kelvin Hopkins: My hon. Friend is making a strong case. He correctly said that corruption is less common in Britain than it is in the European Commission. Indeed, there are many examples in the papers that we have before us today. Is not that a powerful argument for Britain and other member states doing more and the European Union doing less?

Ivan Lewis: Since I have been spending time in the European Union, I have certainly found that some people's instincts are to want to authorise every increase in budgets for the Commission although in some cases the most effective way in which to tackle the problems relating to the budget headings that we are discussing would be through nation states. They sometimes want to create ever-increasing budgets to build an empire within the European Union even when, to achieve effective outcomes, it would be better if the money were filtered through nation states.

David Taylor: The Minister said that he recognises the gap that has grown up between people and politicians. He now says that the solutions to some of the problems that are emerging should be retained within the nation state. Are not we getting ever closer to the time when it is necessary to have a referendum to confirm, or otherwise, the British electorate's approval of the European status quo? Should not we give them an opportunity to say whether they approve of the direction of European policy?

Ivan Lewis: I thank my hon. Friend for giving me the opportunity to become a very famous politician overnight by responding positively to his invitation, but I am certainly not going to. [Hon. Members: "Oh."] I am sorry to disappoint; that is the story of my life, I am afraid.
	It is important that we are clear about where we stand. My position is that much about the European Union could be better and that much about certain people's vision of what it should be about is very damaging to the relationship of the people of Europe with the EU as an institution. Nevertheless, I wholeheartedly believe that this country's place should be at the heart of Europe, arguing and fighting for it to be reformed and made more relevant to its population. That is where I part company from some Conservative Members and some hon. Friends who would like the solution to be our departure from the European Union. I believe that that would be incredibly damaging to our foreign affairs and our economy. It would not reflect the global realities.

Several hon. Members: rose—

Madam Deputy Speaker: Order. I remind all hon. Members that we are debating EU finances.

Ian Taylor: I am grateful for that guidance, Madam Deputy Speaker. However, I endorse the Economic Secretary's most recent comment. It would be absurd for this country not to be in the EU, and that is why we take such an interest in improving it. To avoid a sense of sharing sanctimonious pleasure, will he confirm that the UK Government distribute approximately £2 billion in benefit fraud per annum, which far exceeds fraud in the whole EU? That puts the matter in context, not least because the National Audit Office has qualified the accounts of the Department for Work and Pensions on more than one occasion.

Ivan Lewis: I do not know whether the hon. Gentleman is in the mainstream of his party on the issues that we are considering. The Tory party is undergoing change, and I am therefore unsure whether he is in the mainstream. Of course he is right to say that such issues must always be put in context—unless one is deliberately setting out to prove an argument that portrays the EU as a negative and corrupt institution. Some people want to present the EU in that light because they believe that the country should leave the EU. That is a legitimate point of view, but it would be wrong to portray the budgetary position out of context, in a way that misleads public opinion in an unfortunate direction.

Angus Robertson: I agree with the point that the Economic Secretary is making, but does he accept that it is incumbent on those of us who support the idea of the EU working properly to point out its shortcomings? The most recent Commission report on its reform claims that adopting accrual accounting based on International Federation of Accountants standards could help it to become a leader in the field. That is not credible.

Ivan Lewis: It is important that organisations should not be in denial. It is vital that we tackle the fundamental problems, are honest about them and do not run away from them. This is reminiscent of those who are rightly passionate about the EU but continually want to go down ever more federalist paths, when the people of Europe do not want that sort of EU. However, that position is not the status quo in the EU.
	It is important to make the case for the EU, and the best way to do that is to show people how it adds value, makes a difference to their everyday lives and responds to some of the genuine challenges that face us in a global economy. The EU adds considerable value in the best interests—indeed, the national interest—of this country and its citizens. Those who claim otherwise are disingenuous about the sort of world in which we now live.

William Cash: The answer to the question of whether the money belongs to the EU is clear. It is stated as categorical fact that the moneys that devolve into the EU's budget are those of the EU. Is it not disingenuous—to use the Economic Secretary's expression—to say to member states that fraud happens in the nation states but all the money belongs to the EU? It cannot do the job properly. Why cannot our Public Accounts Committee and National Audit Office audit the moneys that go into the EU's coffers? After all, we are talking about our taxpayers' money.

Ivan Lewis: On the subject of the auditors' inability to give a statement of assurance, they and independent reports by respected European parliamentarians have identified one of the problems at the heart of the matter as individual nation states' inability or unwillingness to account for money that they end up spending. There is no point in denying that. The Court of Auditors has identified it as a major reason why the qualification of accounts is to continue. There has to be co-operation between the nation states and the Commission if we are going to crack this nut and eventually arrive at a point at which the accounts do not have the qualification attached to them. That is simply plain fact. If we do not get the nation states signed up to working in partnership with the Commission on these issues, we are always going to struggle.

Lorely Burt: rose—

Ivan Lewis: I shall give way once more, then I must make some progress. I have been incredibly generous in giving way.

Lorely Burt: I am grateful to the Minister for giving way. He talks about the individual nation states taking their share of the responsibility. Does he agree that the EU should perhaps not allocate subsequent funding to nation states that do not fulfil that responsibility? Would not that bring them into line very quickly?

Ivan Lewis: We are trying to achieve co-operation and consensus on this matter. Of course, at some stage in the process the concept of using a stick might well come into play. If it were absolutely clear that certain rogue states were unwilling to be held to account for their use of these resources, sanctions would of course be an option that ought to be considered. However, at the moment, that is not part of our strategy for reaching a point at which the accounts do not have the qualification attached by 2009. That might be part of the solution in future, but I hope that it will not be necessary. Sanctions are not part of the plan, but they might become part of the solution.

David Drew: rose—

Ivan Lewis: As my hon. Friend has not yet contributed to the debate, I shall give way. Then I must make some progress.

David Drew: I thank my hon. Friend for giving way. I want to be constructive and helpful to him. That marvellous organisation called OLAF, which deals with anti-corruption measures, was set up with a great fanfare as an improvement on the previous arrangements. I have been reading the documents, and surely one of the problems is that it has not had much impact at all. What are we going to do with these cases of fraud? Clearly they just get kicked into the long grass, and everyone gets more cynical. That is no good to anyone, is it?

Ivan Lewis: I think that my hon. Friend is being a little unfair. OLAF has made a difference. We are debating the year 2004, and obviously, quite a bit has happened since then. The overall judgment on OLAF is that it has been a good thing. It has begun to address some of the cultural issues, and to get them taken more seriously. Has it been the solution in itself? Until now, certainly not—but I do not think that that was ever the intention. However, to say that it has not made a difference is unfair, given some of the improvements that are now under way. I do not know whether my hon. Friend would agree with that, but perhaps we can discuss the matter on another occasion. OLAF is a pretty new organisation, and there is evidence that improvements and progress have been made.
	I shall now return to my speech. The relevant figures were 13 per cent. of the total agriculture irregularities and 17 per cent. of the structural funds irregularities, or about €11 million in agriculture and €118 million in the structural funds. These figures are a far cry from the allegations typically made in the media claiming fraud and waste of €5 billion. There is hard evidence to back up OLAF's figures. Of course, that is nothing to be complacent about; it is not acceptable. But I support and commend OLAF's efforts to put the figures on the table, so that we are better informed about the extent and nature of the fraud.
	The "Fight against Fraud" report also contains an analysis of the amount of irregularity—as opposed to fraud—reported by member states. In 2004, 9,463 cases were reported, involving a total amount of €982 million. That is an increase over 2003 levels, although the increase was mainly in the structural funds sector. Indeed, irregularities in own resources and agriculture decreased. The overall increase is, of course, bad news, but, as I have said throughout, it must be seen in proportion. On the expenditure side, reported irregularities accounted for 0.19 per cent. of the agriculture budget and 2 per cent. of the structural funds budget. To be responsible, we must put the figures in context, particularly if we are to have a meaningful dialogue with the public.

Ian Davidson: Will the Minister give way?

Ivan Lewis: I will give way one last time.

Ian Davidson: The Minister is being very generous. The fact that we can have a dialogue of this kind shows the benefits of our system. Does the Minister agree, however, that it is misleading to say that those very small figures represent the limits of waste, in particular? The number of value-for-money studies that the European Commission undertakes is minimal, unlike the number undertaken by the National Audit Office here. We have no comparable examination of waste in the European Union; all that we have is an examination relating to theft and misappropriation. The questions of waste and efficiency of spending are not adequately measured and never have been, and that is not proposed even under the Barroso plan.

Ivan Lewis: That may be so, but I think it unfair to suggest that there is no desire or attempt, as part of the future management of finances, to examine the whole question of value for money, best value and waste. If my hon. Friend had said that the commitment was not as great as he would like it to be, perhaps we could agree—but to suggest that there is no desire to tackle the issue of waste in the European Union seriously is slightly unfair.
	The second issue that I want to discuss is what is being done to improve financial management. The issues in the reports are all too familiar to Members, but, as I have said throughout, that does not mean that nothing has been done to address the problems. In recent years, the United Kingdom has championed a number of measures that have demonstrably improved the quality of financial management by the Commission, and that of the information that we receive. Many of them were introduced under the direction of Lord Kinnock—I am sure that that will prompt applause from Opposition Members—when he was vice-president of the European Commission. For example, the revised financial regulation clearly defined the roles of those accountable for the budget, introduced an independent internal audit facility, required all directors general to sign an annual declaration of assurance on the budget, and ensured that all expenditure was subject to the setting of objectives and the evaluation of their achievement.
	A little earlier, the UK was instrumental in shaping the structure and remit of the anti-fraud office, OLAF. The Chancellor called for a strong independent anti-fraud office, which would have the power of immediate and unannounced access to all European institutions.
	Anti-fraud measures have been adopted. The Commission's report for 2004 summarises achievements such as the conclusion of an agreement with the cigarette company Philip Morris International, which will establish an effective system to combat cigarette smuggling and counterfeiting in the future. The Commission also considers the issue of co-operation with member states, particularly on the effectiveness of the mutual assistance provisions for the exchange of information concerning irregularities detected, and the methods and practices used in suspected fraud cases.
	As for the quality of financial management information, Members will know that the Commission introduced a modern accounting system ahead of most member states, on time and within budget, on 1 January 2005. It will provide full accruals accounting, and should sort out the qualifications raised by the European Court of Auditors. The proof of the pudding will be in the ECA's report on the 2005 budget, which we expect to receive in November this year.
	On the institutional side, there has been considerable debate about how to optimise effectiveness and efficiency. I shall say something shortly about the Commission's "Roadmap to an Integrated Internal Control Framework", but let me first consider OLAF's work in response to the points that have been made. How good a job does it do? Is it effective in the fight against fraud? Does it have the right management and organisation to make a difference?
	That latter question was considered by the ECA in its special report on OLAF. Its main conclusion, with which we agree, is that it is not appropriate to change the status of OLAF, which currently operates as a service within the Commission. It has a hybrid structure and its director has operational independence so far as investigations are concerned, but it supports the Commission in other duties such as policy development.
	From time to time, there have been calls for OLAF to become totally independent of the Commission, but the ECA believes that OLAF's hybrid structure has not adversely affected the independence of its investigative function, and indeed brings with it some advantages. For example, it shares the Commission's power to carry out on-the-spot checks in member states under existing sectoral legislation. The ECA considers that OLAF's resources are sufficient and that it has made considerable improvements in its procedures, but of course it is only fair to say—my hon. Friend the Member for Glasgow, South-West will be interested to hear this—that the report was not without its criticisms. The ECA criticised OLAF's relations with its supervisory committee and its performance in respect of human rights. OLAF acknowledges that its relationship with the committee could be better, and I hope that it will take the opportunity to review that and to make a new start with the new committee that has recently been appointed. OLAF has already addressed the human rights issue through its proposed amendments to its governing regulation.
	Last year, we considered the complementary evaluation report, which showed that OLAF had handled a total of 1,688 cases up to 30 June 2004, in addition to inheriting 1,408 cases from its predecessor, UCLAF. Since 1999, OLAF has reduced the average duration of an investigation from 29 months to 22 months, and the total financial impact of cases closed by OLAF was around €4 billion. The supplementary activity report—produced to cover the six months from July to December 2004, because OLAF intends in future to report on a calendar year basis—updates and expands those performance figures. OLAF has handled a further 720 cases, and the total financial impact of cases that it has closed now stands at €5.8 billion. A total of €198 million was recovered from 2002 to 2004. So the figures are improving and show that the fight against fraud is beginning to succeed.
	What will happen next with OLAF? We expect a revised proposal to amend its governing regulation later this year and we will ensure that that takes account of the ECA's findings. I hope that OLAF will continue to analyse the true extent of fraud, for only when we have a reliable understanding of frequency of occurrence and identification of high-risk areas can we target effective preventive action.
	That brings me to the third area that I wanted to cover: the key next steps. The action plan has been established by the Commission and was agreed by Ministers in ECOFIN on 8 November last year. It covers the steps to be taken by the Commission, member states and the ECA. It bears repeating that the management of agriculture spending and structural funds is shared between the member states and the Commission. Those headings account for about 80 per cent. of the total EU budget, which is one reason why the ECA has frequently highlighted problems in its past reports. As we have discussed today, member states have vastly differing systems and organisations for managing these funds, and the Commission is often unable to obtain the degree of assurance that it seeks in order to satisfy the ECA.
	In response to calls from the European Council and the European Parliament to take action following the ECA report of 2003, the Commission issued a "Roadmap to an Integrated Internal Control Framework"—a snappy title if ever there was one—in June last year. That road map provided a real opportunity to deliver results—to deliver more concrete trust and visible belief in EU financial management and control systems. During its presidency, the UK was very willing to play an active role in taking that forward. The road map was proposed by the ECA itself and in its view, the answer to the problems that it uncovers every year is a system with a number of characteristics. Controls should be applied to a common standard in an open and transparent way, so that the results can be relied on by all parts of the system.

Keith Vaz: I thank my hon. Friend for giving way, and I apologise for not having been present for his opening remarks. I very much welcome the proposed action plan, but does he agree that the arrival of President Barroso and the new Commission has been of great benefit to the EU's transparency and accountability? Also important is the fact that benchmarks will be in place to make sure that all the points agreed on will be reviewed regularly. That will ensure that the transparent arrangements that are so necessary in the EU are in place.

Ian Davidson: Give him a job.

Ivan Lewis: First, may I express my gratitude to my hon. Friend for attending this debate? My other hon. Friends have a slightly different perspective on the matter, although I have enjoyed their contributions. I agree with my hon. Friend, but the cultural change in the new Commission will be judged by actions, not words. We are discussing one very tangible area where the Commission can demonstrate that it is serious about reform that is directly related to its own credibility and relationship with EU taxpayers. As long as the qualification of accounts continues, it will continue to erode and damage perceptions about the EU. As we know, some of those perceptions are unfair and misleading, but significant progress in this area will improve the EU's credibility and reputation.

Keith Vaz: Will my hon. Friend give way again on that point?

Ivan Lewis: I shall give way once more, and then move on.

Keith Vaz: I am most grateful for my hon. Friend's generosity. Does he agree that the impetus for the reform agenda comes from the UK, and stems from the letter that my right hon. Friend the Prime Minister signed with Gerhard Schröder in February 2002? That letter dealt with all the aspects of financial management, accountability and transparency. The reform agenda is Britain's agenda, and we should pursue it as much as we can.

Ian Davidson: Who was the Minister for Europe then?

Ivan Lewis: I agree entirely with my hon. Friend the Member for Leicester, East (Keith Vaz). We have led the argument for reform in all sorts of EU policy areas, including the Lisbon agenda covering productivity, competitiveness, our response to the challenges of globalisation and the EU's relationship with the US. We have been a constructive player at the heart of the EU, and we have begun to move the EU in the direction that we think that it should take to meet the challenges that we all face at the beginning of the 21st century. Other matters on which the UK has taken a lead include international security and terrorism. The UK is seen as a credible player that wants to make Europe work, and not as a nation that constantly wants to debate whether we should be in Europe at all. Our approach has gained us significantly more influence and a greater capacity to achieve change than was the case before 1997, when Britain had no credibility in the EU.
	I shall move on, as I do not want to provoke any more interventions. The other criterion laid down for the road map was that the basis of the internal control system should be a chain of control procedures, with each level having specific defined objectives that take into account the work of others. The ECA also believed that the cost of these controls should be in proportion to the overall benefits that they bring.
	In the road map, the Commission undertook to make a gap assessment, based on comparing its current control systems with the system proposed by the ECA, but it also proposed a way of gaining the assurance from member states that they currently lack. Building on the ECA's integrated internal control framework, the Commission suggested that each member state should produce an annual declaration of assurance in respect of its systems for managing Community funds and how they had performed—in much the same way that Government Departments in this country produce an annual statement on internal control, signed by the relevant accounting officer. The European Parliament wanted those member state declarations to be signed by the Finance Ministers, in order to demonstrate accountability and responsibility.
	Although I have no difficulty with demonstrating accountability and responsibility, there are legal and organisational problems with the European Parliament's idea. Moreover, the ECA did not say that national declarations were the answer. Without such an indication from the Court, there was little or no chance that member states would be persuaded.
	What was important was our joint ability to reach a practical and unanimous consensus. For the UK presidency, it was vital that the road map should provide an acceptable path for all member states, in the full spirit of co-operative action. ECOFIN on 8 November agreed conclusions that committed both the Commission and member states to take action to improve financial management and the level of assurance that we can give the ECA on the management of the Community budget.
	Those actions included an assessment by the Commission of the present controls at sector and regional level, and the value of existing statements and declarations. That will force improvement and allow a realistic evaluation of how the information currently provided can be made more effective and useful. They also included an examination and report by the ECA on how the integrated internal control framework would affect its audit approach, taking account of current international auditing standards. That will help to drive further the changes that the Court has already introduced into its methodology. It will also bring it closer into line with the methods used by the United Kingdom's National Audit Offices, similar bodies in other member stated and the private sector. Another action will be a professional assessment of the level of risks that can be tolerated for different kinds of transactions. At present the ECA applies a blanket 2 per cent. materiality rate for all policy areas, without taking account of complexities. The Commission intends to launch an inter-institutional process this month.
	With those conclusions, the Council has taken action to help to address the criticisms of EU financial management made by the Court of Auditors. Under the UK Presidency, we have tackled this issue for the first time at Council level, and have agreed actions that will commit member states and the Commission to co-operate in playing an effective role in the shared management of the Community budget. The Commission has now produced its action plan to implement the ECOFIN conclusions, and we intend to monitor progress closely.
	The Commission has made it a strategic objective to strive for a positive DAS by 2009, but that will not be achieved without the co-operation of member states. The Government will play an active role in strengthening that co-operation.
	I am well aware that the European Scrutiny Committee is somewhat sceptical of what it considers to be the Government's optimism with regard to the potential for improvement in financial management and control of the EU budget. I am also aware that people feel that they have been told that improvements are on the way for a long time. What has changed is that we now have a transparent process and action plan that will lead to the tangible changes, supported by evidence, that those of us who continue to believe in the European Union want to see.
	This issue is at the heart of the credibility and integrity of the European Union. It is about the relationship between the EU and the taxpayers of Europe. I believe that the UK has played an honourable part in recent times, especially during our presidency, in saying that the issue is exceptionally important. The Commission now has a very different culture and I am optimistic that the 2009 objective can be achieved. However, it will not be achieved if we look to the Commission alone to solve all the problems, because it will also require each member state to take full responsibility for improving their own systems in relation to the expenditure.
	This process has been an interesting exercise in comparing the respective positions of the parties on the European Union. This is an important issue, and it is good that for the first time in several years we are having this debate on the Floor of the House.

Mark Francois: It is a pleasure to be called to speak on behalf of the Opposition in this debate, which encompasses several European institutions, their related spending programmes, and the process by which those are examined by the European Court of Auditors. I am pleased to debate these issues with the Economic Secretary, who was temporarily under the weather after Christmas. I am genuinely pleased to see him back in his place on the Treasury Bench this evening, in his usual humorous good form. He will recall that he and I have debated these topics on several occasions in recent months, including in European Standing Committee A on 1 November, when we focused on the Government's then draft proposals for the EU budget and combating fraud, and subsequently in a Statutory Instruments Committee on 14 December when we looked in some detail at the UK's economic performance relative to our European neighbours in the aftermath of the pre-Budget report. I give the Minister notice that a few questions remain outstanding from those sessions, which fortunately also touch on our business this evening. I hope that he can provide me with answers this evening, as he was not always able to do so then.
	We are here partly at the behest of the European Scrutiny Committee, which recommended this topic for debate on the Floor of the House—and quite rightly, too. The package that the Committee provided us with includes some 30 documents, which we have collectively before us tonight—all 1,158 pages of them—for which we must thank the Committee profusely. Those papers centre on the European Court of Auditors' scrutiny of the EU budget process and include its detailed annual report on the implementation of the EU budget for 2004, to which the Economic Secretary has referred on several occasions as a result.
	The issue of fraud and the reliability of the EU's accounts, which lies at the centre of the debate, has continued to rear its head repeatedly ever since the entire Santer Commission resigned over EU fraud in 1999. We were subsequently told that a reform process would be put in place under Commissioner Neil—now Lord—Kinnock and that those issues would be seriously addressed at last and put to rest once and for all. However, despite that so-called reform programme, the European Court of Auditors has refused to sign off the EU's accounts for 11 years running, because of continuing irregularities. That process was well summarised by the European Scrutiny Committee in its 19th report of the 2005–06 Session, which appears at page 1,089 of our bundle tonight and states:
	"For eleven years, the European Court of Auditors has been unable to give a positive statement of assurance (frequently referred to as a DAS, from the French declaration d'assurance) on the Community Budget. The present arrangements for financial control and audit of Community spending are not working."

John Redwood: Did my hon. Friend notice that when the Economic Secretary remarked on how things could be improved, he gave us verbiage and very vague bureaucratic processes? Does my hon. Friend agree that if we really want to clean up an organisation, from the top, we must say that people who preside over fraud or commit fraud are fired and action is taken against them and that the people who spot it—whistleblowers—are rewarded and promoted? Until we get to that point, are we not going to face this situation year after year, because those at the top of the Commission and the other European organisations do not send a clear message that fraud is the most important thing to root out?

Mark Francois: As usual, my right hon. Friend makes a powerful point. Part of the situation that we are in now follows on from the fact that an entire Commission resigned on the issue of fraud some seven years ago, and the House, the British people and others across the EU were assured that such issues would be tackled head on as a result of that failure. We are now seven years on from then, and the Economic Secretary attempts to argue that, at last, such things are being taken seriously and that the problems will be laid to rest in about three years. I want to test some of the arguments that he put to the House this evening and press him specifically on some of the details of the road map and how it is supposed to work in principle and how it is likely to work in practice.
	The road map is now used by the Government, the Council and the Commission as their answer to the challenge of how the problem will be dealt with. It is designed to facilitate the European Court of Auditors being able to sign off the accounts satisfactorily in the not-too-distant future, and I shall come to the timing shortly. In our debate Upstairs on 1 November, the Economic Secretary laid out the concept of the road map, which was initiated by the European Council and then taken up by the Commission as a result. He explained that the Government has sought to press that initiative as part of their presidency of the EU in the second half of last year. I want to press him tonight on how he sees that operating in detail and on what the European Scrutiny Committee in its 15th report of the 2005–06 Session—at page 12 of our bundle tonight—described as his
	"rather upbeat assessment of the situation."
	Let us get on to the detail. Will the Economic Secretary give us further information on the timings by which he envisages the process working? Given the history of all this, it seems clear that the problem will hardly be put right overnight. Can he provide some realistic idea of the year in which he expects the objective to be ultimately achieved and the accounts satisfactorily signed off, given that the EU firmly committed itself seven years ago to eradicating the problem? The Minister mentioned 2009, but will he be clear on whether the Government's stated position is that the accounts should be 100 per cent. signed off in 2009, or do they hope that the percentage signed off will be higher, if not necessarily 100 per cent.? Getting to 100 per cent. only three years from now seems ambitious, so will he be crystal clear about whether he expects to achieve 100 per cent. DAS by 2009?

Ian Davidson: Does the hon. Gentleman agree that the Minister should tell us what will happen if, whatever the target is, it is not met? We have had protestations of good intentions from the European Commission for a long time about the accounts, but nothing has happened and nothing has been done. Does he also agree that it is essential that the Minister tells us what will happen if the 2009 date is not met? May I also suggest that the Minister sticks with his adage, "Do less, better"? That way, if the target was not met by 2009, the budget would be cut, and that would concentrate minds.

Mark Francois: I thank the hon. Gentleman for an important point, and indeed a point so powerful that it has provoked the hon. Member for Leicester, East (Keith Vaz) to leave the Chamber. I would welcome a clear answer to his question when the Minister replies. In sum, do the Government expect 100 per cent. DAS by 2009, and what will happen if they do not get that?
	The Minister's explanatory memorandum, which is reproduced by the Scrutiny Committee at page 11 of our bundle, reports progress in the following terms:
	"the financial management of around 35 per cent of the total 2004 budget is now assured by the ECA, as opposed to only 6 per cent of the budget (just administration) of the 2003 budget. This is a dramatic improvement, for which the Commission and the Member States should take credit."
	I accept that in purely numerical terms 35 per cent. is better than just 6 per cent., but is the Minister saying he is happy with a situation in which some two thirds of the EU's accounts are not satisfactorily signed off?

Ivan Lewis: No.

Mark Francois: Are not Ministers being complacent in seeming so willingly to crow about only one third of the accounts being cleared, as if that were some wonderful achievement?

Ivan Lewis: No.

Mark Francois: The Minister says no from his sedentary position. We shall see what he says when he winds up, but when he opened the debate he made a lot of the fact that the figure has reached 35 per cent. If he undergoes a Damascene conversion in the space of two hours, I will welcome it.
	On a technical point, we acknowledge the introduction of activity-based budgeting into the budget process, which appears to be helpful as it makes it easier to identify spending by subject headings and by specific line items within them. That makes the whole process clearer and is therefore to be welcomed. May I press the Minister, however, on progress towards full accruals-based accounting, which I understand, from page 6 of the bundle and from his remarks, was due to be introduced in the financial year 2005? That should, in theory, improve the quality of the audit process, but there are several references in the bundle to the fact that it has not yet been brought fully into operation. I know the point is technical, but it is important, and I wonder whether the Minister can update us on progress on the introduction of accruals-based accounting. If nothing else, can he tell us how it has fared so far in financial year 2005?
	At page 9 of our bundle, the European Scrutiny Committee states, on the basis of the chapter of the ECA's report that focuses on financial instruments and banking activities:
	"the Commission does not have a complete overview of the existing assets held by financial institutions on its behalf and such an overview would ensure that the assets are subject to regular and adequate monitoring."
	That is an extraordinary statement. Will the Minister say what initiatives are contained within the much-vaunted road map to ensure that that difficulty is put right, so that the Commission will, in future, have a more accurate picture of what it actually has in the bank? As a British taxpayer, that question does not seem unreasonable and perhaps the Minister will help to answer it.
	The Minister said that the European anti-fraud office, which is popularly known as OLAF, is helping to win the battle against fraud in the EU. Last month, however, Accountancy Age revealed that fraudsters have sent out fake letters from OLAF to innocent victims in an organised scam. Those letters accused the victims of making irregular bank transfers and thus violating money laundering regulations, and they demanded a payment to make amends for the alleged transgression. That is hardly OLAF's fault, but it does not inspire confidence in the system when the name of the anti-fraud office of the EU is used to try and defraud people. Will the Minister tell the House what specific action has been taken to combat that fraud? By way of comparison, has there ever been a similar scam in the United Kingdom by fraudsters purporting to represent the National Audit Office? Hon. Members would like to know whether anyone has had the temerity to try that in the UK, because a bunch of fraudsters have had the temerity to try it on within the EU in the name of the EU's anti-fraud office.
	I want to pick up the Minister on an outstanding matter from our exchange in Committee on 14 December, when we touched on the UK's budget performance against the so-called Maastricht criteria. In particular, we discussed the recommended ratio of debt to GDP, which the Maastricht treaty states should not exceed 60 per cent.—I have the Hansard here, if the Minister's memory has failed him. I asked the Minister what the UK ratio would be if the Government's considerable off-balance-sheet liabilities were included in the calculation. He said that he did not possess that detailed information and that he would write to me, which was fair enough, but it is March and I am still waiting for an answer. Having given the Minister almost three months' notice of my inquiry, will he tell us tonight the ratio of debt to GDP including off-balance-sheet liabilities? [Interruption.] The Minister has quipped from a sedentary position that he should resign, but the matter is not that serious.

Ivan Lewis: How does the hon. Gentleman know? He has not seen the reply.

Mark Francois: If I were able to see the reply, I could make a fair judgment on the Minister's political future.
	In an earlier intervention, I deliberately asked the Minister whether he agrees with the principle that there should be as much transparency as possible from Her Majesty's Treasury with particular regard to our financial relationships with the EU. He favours transparency and wants to give us the information, so will he seek inspiration quickly and let hon. Members know the ratio of debt to GDP including off-balance-sheet liabilities? In the circumstances, the only answer that I will not allow him is that he will write to me.

William Cash: I do not know whether my hon. Friend was in the House at the time, but does he recall that some of us voted against the Maastricht treaty 47 times? We thought that the sort of problems that he has identified with the Maastricht criteria would lead to a position in which the Government simply could not answer such questions. The   off-balance-sheet problems, which he has rightly identified, merge into the privatisation arrangements, which Government Back Benchers strongly resent. That is indicative of the unworkable nature of the Maastricht criteria, which is having a dramatic impact on our domestic agenda, including health, education and a range of other matters. That is why the Maastricht criteria have not been seen in the Red Book since the present Chancellor dared to include them for the first and last time.

Mark Francois: My hon. Friend is well aware that I was not in the House when those lively debates were under way, although I assure him that I followed them from a distance. He has raised an important point, and I recall that off-balance-sheet debt was raised in this context at the time.

Ivan Lewis: rose—

Mark Francois: I see that the Minister is bursting to intervene. I am bursting to give way to him.

Ivan Lewis: Will the hon. Gentleman pass on to the hon. Member for Stone (Mr. Cash) our thanks for the fact that Labour is starting its third term in office?

Mark Francois: If the Minister wants thanks from anyone, I shall thank him when he provides an answer to the question that I asked him three months ago.

David Taylor: I should tell the hon. Gentleman that when he chases his fox to ground he will—sadly, from his point of view—find that it has died. I, too, have examined the private finance initiative and the ability it provides to keep items off the Government balance sheet, but even if those items were all included the Government, because of the stewardship of the next Prime Minister, would still be within the targets that were set. None the less, I agree with the hon. Gentleman about the dubious nature of some of the off-balance-sheet accounting in which most Governments are involved, so I hope that he will join my all-party group—which will have written to him recently—and promote financial transparency.

Mark Francois: I thank the hon. Gentleman and look forward to receiving his letter—which is one more than I have received from the Minister. It is an interesting situation when the hon. Member for North-West Leicestershire (David Taylor) has to come to the Government's rescue. That does not happen very often and I hope that the Government Whip on duty has taken full note.
	The best answer that I can give to the hon. Gentleman is that we are seriously concerned about the extent of the Government's off-balance-sheet liabilities. We would like to have their version of the answer to my question so that we can debate the matter. That is information that the House would genuinely like to have at its disposal.
	The need to achieve reform of the EU budget is brought into even more stark relief by the Government's sell-out in respect of our contribution to it, in particular their capitulation on the British rebate. Perhaps the Minister can explain to the House tonight how on earth it makes any sense to give away £7 billion of UK taxpayers' money via the reduction in the rebate to an institution that cannot even produce a set of accounts to the satisfaction of its own auditors. The Government would be understandably reluctant to continue to pay rate support grant, or its modern equivalent under formula spending share, to any local authority in this country that had only one third of its accounts cleared as satisfactory by the district auditor, so why give away so much more of our taxpayers' money to the EU?
	We would be especially pleased to hear a Treasury Minister's view on that subject, because it is an open secret that the Prime Minister did not even bother to consult the Chancellor during the final hours of the negotiations. Even though the Chancellor now says that he supports the policy, "Project Gordon" clearly took the day off.
	Will the Minister confirm first, that the £7 billion in question was not included in the estimates prepared for the pre-Budget report of 5 December last year, and secondly, that it will now be included in the figures to be presented to the House of Commons and the British taxpayer in the forthcoming Budget on 22 March? It would be helpful to have that confirmation tonight.
	Tonight, we are discussing the way in which the EU can reform itself and put its own financial house in order. Put simply, if the EU cannot fight fraud effectively and produce a worthy and reliable set of accounts that the European Court of Auditors can legitimately sign off, all its other attempts to win back public confidence are likely to come to naught.

David Drew: We hear about the wonderful inquiries that OLAF has conducted and money may well have been reclaimed, but does the hon. Gentleman know what reprimands, sanctions or withdrawal of future funds the EU has imposed when it has been able to prove that fraud has occurred? Does he know of any examples?

Mark Francois: I have given one example of an attempt to perpetrate a fraud—one that, ironically, used the name of OLAF itself. However, history shows first, that the EU institutions have been bad at pinpointing fraud, especially in agriculture and structural funds; and secondly, that even when they have succeeded in pinpointing fraud, they have been poor at recovering money on behalf of the European taxpayer. The hon. Gentleman touches on two weaknesses in the system and has allowed me two bites of the cherry, for which I am grateful.
	The Government have backed a road map for making progress on the issue but, as events in the middle east have starkly reminded us, it is one thing to lay out a road map and quite another to see it through to fruition. Our position on the road map being able to achieve meaningful financial reform of the EU is that that may be worthy in principle, but we will believe it when we see it.
	Finally, whatever the Minister says this evening, I am sorry to report to the House that the British people have recently been defrauded of some £7 billion of their own money, although not, in fairness, by some distant European Union institution, but by a Prime Minister desperate for a legacy—even one with massive price tag attached.

Kelvin Hopkins: I am pleased to have a chance to speak in this debate. This is the ninth consecutive year in which I have made a speech on this subject and I find it astonishing that, for 11 consecutive years, the accounts of the European Commission have not been signed off. If that happened in Britain and the Chancellor and the Government performed as badly as that, they would be in serious trouble by now. Rather than having OLAF, perhaps we should give the National Audit Office and the Public Accounts Committee the responsibility of looking at European accounts. As we are a net contributor, we might save some of our money if we did that. However, that is just an aside.
	European Standing Committee B, of which I was member for eight years—I spoke on these matters many times—has considered the issues in detail. I have not managed to read all the papers, but I have scanned them. One has only to open them at any page and look at a table and the facts start to shout out. For example, on page 121 there is a table entitled
	"Suckler cow premium: percentage of claims inspected with errors".
	Sadly, the UK has quite a high percentage of claims inspected with errors—nearly 20 per cent.—and although most of the cases are not serious, some are.
	A pie chart on page 932 deals with certain investigations. It shows that two thirds relate to corruption, a quarter to embezzlement and only a tiny fraction—about 6 or 7 per cent.—to sloppiness, mistakes and inefficiency. We are talking about deliberate mischief, not things that happen because people are not doing their jobs properly. People are deliberately defrauding the European Union budget by one means or another, which is a serious matter.
	The problem is inherent in the European Union in that people are spending other people's money and it is always easier to spend someone else's money than one's own. If one is accountable to one's family for the money that one spends, one will be much more careful. If one is accountable to the House of Commons, one will be much more careful. If one is accountable to an electorate who have a direct concern and interest in how their money is being spent, one will much more careful. The problem with the European Union budget is that it is remote and complex and there are myriad people who benefit from it in far-flung corners of the European Union. It would be difficult even for a very efficient organisation such as the National Audit Office to deal with a vast amount of money that is spread so widely.
	We have to consider the whole concept of the European Union budget. That is why I have said on many occasions, and say again today, that we should seek the abolition of the common agricultural policy, because that is where the principal problems lie. If agriculture policy was simply repatriated, each member state could decide its own level of subsidy for its own unique agriculture systems. Every country has a different pattern of agriculture. I do not think that there are any Welsh Members in the Chamber, but I have mentioned several times that we might choose to preserve the way of life of Welsh hill farmers. That is fine. It would not cost very much and it might be a good thing to do. [Interruption.] We do have a Welsh Member present, but I do not know whether my hon. Friend the Member for Alyn and Deeside (Mark Tami) has any Welsh hill farmers in his constituency—possibly not. Nevertheless, there are sectors of agriculture that have to be subsidised. That is appropriate, but other agricultural sectors do not fall into that category. I understand that the vast proportion of CAP funds go to agribusiness sugar producers, to the disadvantage of poorer producers in other parts of the world such as the Caribbean, Africa and elsewhere. I would like us to buy more sugar from those producers and spend less on agribusiness sugar production in Britain and the rest of the EU.

Henry Bellingham: The hon. Gentleman speaks with a great deal of expertise on this subject. Does he agree that the sugar regime is important to many farmers in East Anglia? Britain is about 60 per cent. self-sufficient while France is about 180 per cent. self-sufficient. The low countries and Germany are all more than 100 per cent. self-sufficient. In the case of the UK, the hon. Gentleman's suggestion means that applying our own rules would be much more sensible.

Kelvin Hopkins: The hon. Gentleman has made a helpful intervention. In the previous debate on this subject it was suggested that we might produce sugar as a biofuel, which would be a much more environmentally friendly form of fuel production, producing alcohol for fuel. That is one possibility. Whatever the arrangements, we could choose nationally how we subsidised our agriculture. I am sure that we could do that while taking account of all the needs of the rural population, including farmers, as appropriate. I am sure that we would do a much better job of it than the CAP and the EU. Indeed, every country would do better.
	We should have a proper and thorough study of the precise fiscal distributional effects of abolishing the CAP. What would happen to France? I have made a rough calculation that shows that abolition would not make that much difference. There might be a small cost equivalent to less then 1 per cent. of GDP if France were to subsidise its farmers directly rather than through the CAP. Indeed, the CAP is so inefficient and so corrupt that France might do a better job of it directly rather than through the CAP. Getting rid of the CAP would solve many of the problems.

David Drew: I concur with my hon. Friend's view on the CAP. Does he agree that one of the problems with the recent budget was the many warm words that were spoken about moving towards rural development in place of targeted support based on production? When push came to shove, all the countries involved fell down on the obligation towards rural development and, again, sucked money back into direct support. That might have happened because of the French, but the British also fell into line. Surely that is shocking.

Kelvin Hopkins: My hon. Friend speaks with great expertise on agricultural matters, and I am pleased to receive his assistance. We should consider rural policies in terms of agricultural subsidies. Perhaps we should regenerate some of our livestock farming, which is so healthy for the countryside, and also good for wildlife and for the environment. That could be done if we had a national agricultural policy rather than having a system that is based on the CAP and the EU.
	So often, those who take a critical view of these matters are said to be anti-European. I feel that I am strongly pro-European in the best sense. I was born in Europe, I speak a European language, I love European culture and I love European people. I happen not to believe that the construct that is called the European Union is a good idea as it stands. I believe that it should be substantially reformed. It is the EU construct that is wrong, not Europe. Europe is a wonderful place.

Diane Abbott: Does my hon. Friend agree that those of us who are critical of the EU construct can call ourselves genuine internationalists? We believe that it is immoral that so many billions should be sucked into subsidising agribusiness when much smaller sums could be provided to help and support agriculture in the third world.

Kelvin Hopkins: My hon. Friend is right. On the point of internationalism, those of us who take a critical view of the EU and the CAP have strong international links with other social democratic and socialist parties on the continent. We have regular meetings with the members of those parties. We try to put forward more progressive social democratic approaches to dealing with European policies.

Angus Robertson: While not agreeing with everything that the hon. Gentleman said, I concur with his internationalist agenda. Is he aware that the unreformed European Union, as it currently stands, is putting some countries off joining? I advise him to read the current edition of The Economist, which outlines the difficulties the Icelandic Government have with possible membership because of the disastrous common fisheries policy. Should that not also be reformed, otherwise the financial problems will continue?

Kelvin Hopkins: I thank the hon. Gentleman for his intervention. I agree about the commons fisheries policy. The European Union would be much more attractive to existing members, as well as to potential new members, if it worked better and was seen to be more just, fair and effective. I can think of a number of ways in which it should be reformed. However, I wish to stick to the topic of the budget and how the money is spent.
	The other matter about which I am concerned, as is the Department for International Development, is the aid budget. That budget is spent ineffectively, is subject to some corruption and goes to the wrong places. It has been heavily criticised by DFID Ministers, both privately and publicly. I have suggested two possibilities for that budget. The first is that it should be repatriated and member states should be required to contribute a proportion of their GDP to aid. Perhaps the proportion might be higher for the richest nations. There should be a formulaic approach to aid so that we make sure we pay enough, but it should be distributed through national Governments or national Governments in collaboration.
	The second suggestion involves DFID, because it is recognised as doing a good job with aid and as not being corrupt. I have not supported some of its policies regarding privatisation, but it is highly regarded. I have the greatest regard for our present Secretary of State for International Development, whom I have heard speak on many occasions, who does an extremely good job. If the aid budget for the European Union were handed over to Britain to manage on a franchise basis, I am sure that we would do a much better job than the European Union and that the aid would go to the right places. Some of the problems with that budget relate to the fact that national interests dictate that some aid goes to slightly richer countries around the rim of the Mediterranean rather than to sub-Saharan Africa where the need is greatest. We have to repatriate the aid budget or introduce fundamental reforms, perhaps even hand it over to DFID to manage. With our present Secretary of State, we would do a good job.
	Other aspects of the European Union budget will cause problems. It irritates me when I walk through my town centre and see a large notice, with a big, blue flag with yellow stars on it, saying that the town is to be modernised with money from the European Union. We are massive net contributors to that budget. It is our money, not the European Union's money, that is paying for the modernisation, but the EU gives the impression that it is a benign Father Christmas delivering money to Britain, when actually we are Father Christmas giving money to the European Union. I am not suggesting that we should not give fairly to the budget. Indeed, I have suggested on many occasions that if we had a budget inwhich contributions and receipts were exactly proportional to living standards in member states, so that richest give most and the poorest receive most, that could be seen to be fair. One could just look at a sliding scale and see a graph of how it worked. Everybody would say that that system was fine and they would sign up to it. But the current budget does not work like that; the CAP distorts it and makes it look unfair.

William Cash: The hon. Gentleman refers to structural funds and suggests that we should give as much as we reasonably can and be fair in giving money to other countries. Does not that belie the fundamental point that structural funds are at the heart of regionalisation, which has a severely adverse impact on the United Kingdom—on hospitals, ambulance services, the police, fire authorities and so on? The whole process is disintegrating under the guise of the creation of a more centralised system, which is of course what the EU really is.

Kelvin Hopkins: I was about to say that national Governments should distribute funding according to their needs; they should make the judgment about which of their regions needs money. Indeed, the Chancellor has suggested that as and when our regional fund benefits disappear, as poorer member states join, extra funds will be substituted by the Treasury, which is right. However, we in the House are the best judges of which regions need more or less money. We should make those decisions and the situation is the same for other countries. Distribution should be proportionate to relative GDP per head in member states and they should make their own decisions.
	I agree with the hon. Gentleman's point about regionalisation. I am seriously concerned that building up the regions is an attempt to play down the Governments of member nation states. I cannot accept that. Member state Governments are the political entities in which the majority of people believe. I do not suggest that nation states should be nationalistic, but national Governments should have the final responsibility for the welfare of their citizens. The central Governments of member states should have that democratic role, which should not be undermined by the EU building up the regions and playing down member state Governments. That would be a great mistake.
	We have an ongoing problem with the European Union. We are tinkering at the edges of the corruption and incompetence with which the budget is managed, and fundamental change will be necessary if we are to overcome the problems. We have to deal with the fundamental problem that people and institutions in the member states—farmers and so on—are spending other people's money and that that is somehow all right. It has even been suggested that the glue holding the EU together is the fact that money is sloshing about and everybody gets a bit of the action. That is not the way to approach democratic politics. We should know what we are spending our money on and vote to spend it as appropriate, collectively in democratic member states and, where necessary, at minimal level, through the EU.
	As the Government have said many times, the EU should be an association of independent, democratic member states working together for their mutual benefit, where appropriate. It should not be the beginnings of a European superstate, which many of us would reject.

Susan Kramer: I apologise for not being in the Chamber at the start of the debate. I did not for a moment believe that merchant shipping would not take up the full time allocated—it was unexpectedly treated with brevity.
	I shall set out our position and suggest some directions that we should like reform to take. Whether the issue is fraud, error or irregularity, Liberal Democrats take it extremely seriously. It is completely unacceptable that, for the 11th successive year, the ECA cannot sign off the EU's accounts with a positive statement of assurance.
	I am conscious, however, that we need to be careful about throwing stones—as other Members have remarked. As the House knows, the EU presents its accounts for audit in a global fashion, whereas in the UK we present them Department by Department. As others have pointed out, the National Audit Office has qualified the accounts of the Department for Work and Pensions on more than one occasion, so if there was a global set of UK accounts, they would all be qualified. The uncertainty and mistrust that flow from unsatisfactory sets of accounts undermine the whole purpose and image of the EU, so we want to tackle the problem as aggressively as possible.
	May I propose three ways in which we could tackle the issue? First, as the House is well aware, 80 per cent. of the EU budget or approximately €65 billion is spent by the nation states. Policy is set at EU level, but the responsibility for spending and payment, primarily of the common agricultural policy subsidies and the structural funds, is delegated to national level. The European Parliament, in its discharge report on the last annual budget, called for national Finance Ministers to sign off a national statement of assurance for each member country, with the goal of making sure that each member state takes full and proper responsibility for spending and payments inside its national boundaries. Ministers rejected that at the last European Council—they are not anxious to be accountable to the European Parliament. At a minimum, however, a key national body, whether the NAO in this country or an equivalent body in other countries, ought to take on that responsibility, as we need a detailed audit trail from the bottom to the top. It could be constructed as a pyramid, with each audit built on a sound audit at the level below. We could then begin to force each nation to face up to its responsibilities as a member of the EU.
	Once national statements are made, as my hon. Friend the Member for Solihull (Lorely Burt) suggested, we can begin to consider the issue of penalties. It is not acceptable for people to recognise that information is not properly controlled or monitored year after year and that there is a potential for error or fraud but to fail to take reasonable action. The total elimination of payments may not be required but a penalty could be imposed. As the EU grows and more countries join as a result of accession, there is a danger that those countries will not put in place the proper auditing structures, controls and monitoring. By starting on the wrong foot, we will compound the problem and the issue will escape us in its complexity.
	Secondly, the Commission's internal system of controls is a concern. We cannot place the whole problem on the shoulders of the nation states. It is unacceptable that parliamentary recommendations have not been followed, as they require key members of the Commission to sign off essential reports such as the annual activity reports and declarations on which the synthesis report is based. Whether it is a director general, the secretary general or the internal auditor who is accountable, there must be a structure so that the Commission takes internal responsibility far more aggressively and positively for the accounts that it presents.
	Thirdly, we have often talked about tolerance of the risk of error. The NAO has a tolerance rate of about 1 per cent., as it accepts that there is a point at which chasing error is far more costly than the error itself. There is therefore an acceptable benchmark, but as discussions proceed in the EU it is critical that the error tolerance rate should be very low. It could be 1 per cent., as it is in the NAO. We must treat the EU as a sophisticated, developed organisation and, if we are to have confidence in it, we should not apply the standards that we would attach to overseas aid to developing countries.
	Finally, when the EU talks to the developing world and tells the United Nations that it must be careful about the way in which it offers aid to new and emerging economies it should make certain that it is purer than Caesar's wife. We take a proactive stand over and over again, telling developing countries that they must clean up their auditing act, but for us to do so from a position where we can be criticised strikes me as unacceptable.
	I speak as a pro-European. There is nothing less acceptable to a pro-European than to sit by and look at an unreformed EU that permits a relatively low standard of auditing to continue year after year. For the credibility of the European Union, which I consider to be an important part of our future, we must pursue the kind of reforms suggested in the road map, and we probably have to go beyond that.

David Drew: I shall keep my remarks brief. The debate is time-limited and most of the points have been covered in interventions and in the wonderful speech of my hon. Friend the Member for Luton, North (Kelvin Hopkins)—the annual event. We always look forward to it. We know that the content will be riveting and the meaning profound. I entirely sign up to what he says, especially about the CAP.
	I know that we have all been assiduous and read every last dot and comma of the light reading that comes with the debate. As the hon. Member for Rayleigh (Mr. Francois) said, one needs to approach these matters with some degree of scepticism. The Minister was positively Panglossian in his assessment. It is not an easy line to defend on behalf of the Government, because all is not right in the court of Brussels. I make no apologies for being sceptical. I wish to see a better European organisation, whether that is the EU or a subsequent body.
	The strength of the EU is that it is drawing in more and more countries. To be fair to those new entrants, they are faced with an enormous dilemma. Having spoken to representatives of those countries, I know that they are levered into a position in which they would not want to be. The Maastricht constriction immediately does enormous damage to those economies. Even though they may grow in the short run because of the benefits of the single European market, they subsequently have to make compromises, in the form of changes to their agricultural system and in response to the manufacturing pressures brought to bear on them, which often entail massive redundancies.
	These circumstances are directly relevant to the financial structure. The Maastricht criteria are far too restrictive and far too likely to lead to structural problems of the worst kind. Some of us would go much further, but I hope we will recognise that we owe a duty to the EU to make sure that its auditing and financial control are hundreds of per cent. better than they have been so far. They have been lamentable, resulting in the divorce between the peoples and the governance of the EU, reflected more recently in the divorce between national Governments and their electorates. That is why we will never revisit the European constitution because, if anything, the votes would be even more overwhelmingly against. That is why we could not hold a vote in the UK. The Government could not be seen to hold a vote that they knew they were bound to lose.

Kelvin Hopkins: I draw my hon. Friend's attention to developments in the past week or two in France, where Monsieur de Villepin has strongly supported the idea of the French retaining national champions and not allowing takeovers by other European nations. Does that not suggest a degree of concern that the nation state is being submerged in a superstate and that some member states are having second thoughts about retaining their own democratic and economic institutions?

David Drew: I need say no more than that I entirely agree with my hon. Friend.
	I should like to do some textual analysis. It is always welcome that those who can do so try to synthesise the various documents. We try to read them, but they are long on words and short on meaning. I welcome the recently revealed National Audit Office document on the financial management of the European Union. With the best will in the world, it is hardly a glowing endorsement of the EU. It says of the Court of Auditors:
	"The Court did not give a positive opinion on the legality and regularity of the transactions for the following expenditure headings: the Common Agricultural Policy",
	which is 40 per cent.-plus of the budget, "Structural Measures"—how much more of the budget does that include?—
	"internal policies; external actions; and pre-accession aid."
	What is left? That is our own NAO putting the boot in, not terribly subtly, but necessarily overtly. That is the sensible way in which it has to deal with these matters, and I commend it for doing so.
	This is not just down to the EU itself but down to the way in which it works with its member states. However, it is of course the EU's responsibility to deal with these problems. I had a go at OLAF in an intervention on my hon. Friend the Economic Secretary. As he said, OLAF is in its infancy. My hon. Friend the Member for North-West Leicestershire (David Taylor), who is no longer in his place, reminded me that OLAF was set up in 1999. I know that it is easy to criticise Governments for failing to deliver and for always coming up with good intentions but being unable to follow them up with the detailed plans that we would want. However, we are now seven years into the operation of OLAF. It may have a long way to go, but if it has not got very far in seven years, I hate to think how long it will take before it really cracks the whip and begins to bear down on the corruption and anti-fraud measures that it needs to bring in.

William Cash: The hon. Gentleman rightly referred to the rather blunt criticisms of the Public Accounts Committee and the National Audit Office in respect of the Court of Auditors as part of the chain. Criticisms of OLAF include the point that
	"There is no independent control of the legality of investigative actions."
	It cannot get much worse than that.

David Drew: I tried to get hon. Members to give examples of where OLAF and other EU apparatus have really been able to get hold of those who have defrauded the EU and take their money away. All that happens, at best, is a slight tap on the wrist. That is not good. It goes back to the point about new entrants, who have to live with this legacy. They have to come in and say that they are going to behave themselves when they have nothing to go by as a yardstick. That is not acceptable. Unless we put our house in order, the new entrants, including the Romanians, the Bulgarians, the Croatians and perhaps the Turks in due course, will have nothing to live up to but plenty to live down to.
	The danger is that we will simply let the matter slip through for one more year. The general public heavily criticise us for not examining what happens in the EU carefully—it is a criticism that they always advance. They say that we are not doing our job properly. I have every sympathy with our hon. Friends who serve on the European Scrutiny Committee, who do wonderful work. However, we never do it on the Floor of the House because it appears to be too complicated, we have too little time and we are told that we will not understand the issues. The work is therefore all dumped upstairs.
	Every year, we tip the hat and say, "What can we do about it?" It is the same as allowing an alcoholic another drink. We always say, "It's going to be different. It'll be sorted out tomorrow. It'll definitely be sorted out for the next accession states", but it never is. Hon. Members should take account of that and do much more.

Angus Robertson: Why does the hon. Gentleman think that only 14 or 15 hon. Members perceive the issue to be important enough to turn up to listen to the debate?

David Drew: I agree—it is a tragedy that so few hon. Members are present. If one gives people a doorstep to scrutinise, some think that that is not what they were elected to Parliament to do. That is part of the problem. However, that is why they should be here. I appreciate that we have much else to do and that many other debates and important meetings are going on, but there is nothing more important than our relationship with the EU, which is fundamentally flawed and on which our views are divorced from those of the electorate.

Ian Davidson: Few hon. Members attend such debates because we hold the same debate year after year about the iniquities, dishonesty, fraud and waste of the EU. We all agree that something needs to be done but nothing is. It is therefore difficult to get people to attend yet another debate on exactly the same subject.

David Drew: Perhaps some of us should be more willing to scrutinise and to draw a line in the sand. We are all pushed to acquiesce in the unacceptable position. Some Labour Back Benchers have not been positive about what is going on. Perhaps if other quarters listened to them—the official Opposition may be rethinking their policy but at least they have been critical of the EU's auditing and financial control—we could all learn a lesson. It is up to us as parliamentarians to do something about it. I shall leave the matter now but some of us will make our reservations felt.

Ian Taylor: I came to the debate with a light heart and a racing pulse. The excitement was undimmed by the 1,000 pages that were handed to me and I am immensely impressed with our current Front-Bench spokesman, my hon. Friend the Member for Rayleigh (Mr. Francois), who had clearly read every page. That shows Opposition at the cutting edge.
	The genuine reason for my excitement was that I knew that my good and hon. Friend the Member for Stone (Mr. Cash) would seek to catch your eye, Mr. Deputy Speaker. We are the Mars and Venus of Conservative European policy and I therefore believed that it was incumbent on me to make a contribution.
	The EU clearly has considerable problems. The hon. Member for Luton, North (Kelvin Hopkins) referred to several. There is anxiety about protectionism and anti- globalisation reaction, which is unsustainable but nevertheless an attempt by various Governments to curry favour with their electorate rather than explain the realities of life. The interesting irony is that we have not given sufficient powers to the Commission and the European Court of Justice to intervene in such matters. It will be interesting to see whether the Commission will take on the French Prime Minister and the French President over the way in which they have attempted to merge the Compagnie de Suez and Gaz de France in an almost transparent attempt to block an Italian takeover. That is not the subject of this debate, but it is actually quite material.
	Those of us who believe that it is in Britain's national interest to continue to be an active member of the European Union despite its imperfections must also accept that those imperfections need to be taken on and challenged. It is therefore perfectly right that the European Scrutiny Committee and others should deliberate on the concerns about the budget.
	I would like the Commission to be more powerful—and more open—but that power can be properly exercised only if there is public confidence in the Commission and its procedures. In the case of the budget, we have seen serious errors, year in, year out, and serious matters of concern for the Court of Auditors. That institution was set up by the last Conservative Government, precisely because we were concerned about the lack of transparency in budgetary procedures. More recently the organisation known as OLAF was set up. Those organisations have begun to take on some of the problems, but they have not made sufficient progress. The fact that about a third of the budget has now been approved represents gratifying progress, but it is clearly not sufficient.
	I call to the attention of the House the remarks of my European parliamentary colleague, Richard Ashworth, who has said:
	"The Commission has belatedly begun to put in place measures that should tighten budgetary control and enhance transparency. It is important that those measures succeed".
	I entirely agree with him. He is the Conservative budget spokesman in the European Parliament, an institution that is growing in stature, although it is sometimes dismissed as unimportant. This is not a zero sum game: the European Parliament has a valuable role to play in areas with which this House does not deal. I am delighted that our Conservative colleagues there are playing an active role in the European Parliament in conjunction with our good allies in the European People's party.

William Cash: On my hon. Friend's point about Venus and Mars, may I point out that I would rather adopt the position of Mars than of Venus in this context? Does he acknowledge that our colleague, Richard Ashworth MEP, also said:
	"Trust in the integrity of the accounting systems of public bodies is an essential cornerstone of democracy. It is not, therefore, acceptable that the Court of Auditors continue to fail to give a clean bill of health for the EU accounts and the public perception that the EU authorities have an ongoing reluctance to address this problem seriously undermines the credibility of the whole of the EU."
	I am not criticising my hon. Friend for leaving that bit out, but I thought that I should mention it.

Ian Taylor: I am delighted that we Conservatives are always united on these matters. I agree that the failure of the scrutiny and approval of the budget undermines the status and authority of the Commission. I would like to see that status and authority enhanced, alongside the pre-eminent body in the European Union, the Council of Ministers, of which I was a member several times during my ministerial career—

William Cash: What about the Court of Justice?

Ian Taylor: My hon. Friend asks me that question from a sedentary position. Perhaps he is getting tired of standing up to make his interventions. The Court of Justice provides an important way of enforcing the measures that are agreed to by the Ministers in Council. Indeed, a previous speaker referred to the importance of the Commission taking note, but, in many cases, it is the Ministers who give the Commission instructions to take note. An example is ECOFIN—of which our Chancellor is a member—which is very much involved in attempting to ensure that there is reform and improvement in the institutions of the European Union. The point that I am making is that those of us who believe that it is in Britain's national interest to be in the European Union also believe that the European Union should be reformed and that it should make every effort to overcome the inadequacies that exist, most notably in regard to the issue that we are discussing this evening.
	Of course we must have a sense of context. It has always been said that the number of people employed by the European Union institutions is roughly equivalent to the number employed by the county of Staffordshire. I have long since forgotten how many people are employed by the country of Staffordshire, but we should appreciate that we are talking about a comparatively small number of people. That does not exonerate them from a failure to have their accounts properly audited and approved, but it puts the position in context. Sometimes the House, along with some of the British media, greatly exaggerate the apparent problems in the European Union.

Ian Davidson: Does the hon. Gentleman accept that the parallel he drew with Staffordshire is deliberately misleading and one of the myths that the European Union has long peddled? Many of Staffordshire's employees deliver services directly to the public, unlike members of the European Commission. A much more appropriate parallel could be drawn with a military general staff, who send out orders that will control thousands, if not millions, of people. That is a significant comparison, rather than a false comparison with an organisation that actually does some good.

Ian Taylor: The hon. Gentleman clearly has a deep admiration for the people who work for the county of Staffordshire. I cannot even begin to understand how he knows about them, but the comparison is valid. The question of how good the workers are is separate.
	While we are making comparisons, let me make another. The total EU budget was less than the budget   for the Department of Health in 2004–05, at £71.5 billion. I am not saying that the Department of Health spends its budget better than the European Union but merely making a comparison of size. That does not reduce the importance of the accusation levelled against European Union institutions that fail to secure auditing of their accounts. I am talking about the context, which is sometimes blown out of proportion. The House rarely engages in three-hour debates—even debates attended by the number of people who are present this evening—on the way in which the Department of Health spends its budget, or on the fact that, as I mentioned earlier in an intervention, the budget of the Department for Work and Pensions has been unapproved by the National Audit Office on more than one occasion. I am trying to establish the context rather than evaluating the effectiveness.
	It is important that a House of Lords Committee is to scrutinise the documents, and we shall pay close attention to its findings. I understand that it will consider a number of questions. For instance, what are the fundamental problems that have led to the accounts not being given a positive statement of assurance for the past 11 years? I am sure that the hearings on that question will be very interesting. Are the suggestions for improving management of the budget appropriate, will those improvements lead to a positive statement of assurance by the end of the tenure of the Barroso Commission, and can lessons be learned from accounting procedures in other countries? I look forward to all those deliberations, but the last point is particularly important.
	It is in no way an exoneration of the Commission, in terms of its responsibility, to say that although national Governments contribute to the totality of the budget, 85 per cent. of the funds are then administered by member states. It is extremely important for member states to take responsibility for the proper administration of those funds. As they are predominantly funds to deal with agricultural problems, and structural funds, it is frustrating for the Commission that it gets all the flak while national Governments get very little.
	It was suggested earlier that an independent investigation, the equivalent of a National Audit Office investigation, should be carried out to assess the performance of the Government of each member state. That is a good suggestion. The fact that it might amount to a supranational intervention does not deter me, although it might pose problems for some Members who have spoken today. However, it is very important that national Governments face up to their responsibilities, because in a sense, when they act on them badly they set a bad example not just to the Commission but to the new member countries. If Poland, which is a very considerable country itself, sees other countries not observing the rules, it might be tempted to go astray. So we must all set an example that will set the tone for how the budget and the Commission develop.
	Whether we can improve matters by activity based budgeting or by accruals is a complex and difficult question, but the Government need to put much more pressure on the Commission than they have done to date. They have been in power since 1997, so discussing what we did before then is irrelevant. Those of us who believe that the European Union brings benefits to this country are profoundly concerned that those benefits are being distorted by public criticism—it is justified—of the management of moneys transferred to Brussels. That is diminishing the value of programmes such as aid, when in fact, in many countries, the aid budget, which is administered by the EU, is valued and highly regarded.
	As one of those Opposition Members who has consistently believed that membership of the European Union is in Britain's national interest, I urge the Minister to reinvigorate his efforts to ensure that this matter is dealt with by the Barroso Commission. Barroso himself I find an impressive figure. He has had big issues to deal with. He is a former Prime Minister of a good ally of ours within the EU, and a very sharp and intelligent man. But he clearly needs help not just from other commissioners, but from the member states themselves, if this problem is to be brought under control.

Ian Davidson: I begin by paying tribute to the Minister's generosity in giving way so often during his opening remarks. It is worth my saying openly that we all welcome the opportunity that that provided to have a dialogue with him, and that many of his colleagues would do well to take lessons from him in that regard. He spoke for some time, and I must say in all honesty that he was not always wrong. I strongly agree with a number of points that he made, particularly his call for the European Union to do less and to do it better.
	I want to return to a point that I made during an intervention about the road map. We have been promised for some time that the EU will behave better at some future point, but it never actually happens. We are now being promised that by the end of 2009—the end of the Barroso Commission—such problems will be resolved, but it is not clear what will happen if they are not. I am not aware of what the British Government believe should happen in those circumstances. I very much suspect that whoever the next Commissioner is—be it Peter Mandelson or someone else—we will simply carry on, saying, "We will try to resolve the situation by the end of this presidency." My worry is that this is a process without end, and it is for exactly that reason—because we see so little progress—that so few Members bother to attend these debates.
	What tangible gains were made during the British presidency in terms of introducing a greater degree of financial probity? What did Britain achieve in that area that we can look back on with pride, saying, "That resolved some issues and resulted in a considerable improvement"? I am not aware of the British presidency's having resulted in many real achievements, although I entirely accept that the Government's heart was in the right place and that they made the right noises, said the right things and tried to move in the right direction. However, the achievements that they have to show for it are somewhat limited. It would also be helpful if the Minister were to clarify the steps being taken in conjunction with Austria and Finland to ensure that any minor gains achieved are being carried forward, so that demonstrable progress can be made.
	The Public Accounts Committee regularly produces reports on EU financial management. One significant element of the most recent report was the attempt to simplify the rules governing the EU and all its operations. The complexity of the present regulations exacerbates the problems encountered in their operation. It has increased administrative difficulties and the opportunities for fraud, and it is not entirely clear that Britain has achieved as much in that regard as it might have wanted.
	The Minister did not mention the question of the culture within which the EU operates, which I see as one of the main problems that we face. Britain is not perfect in that regard, but at least our attitude to waste, fraud, corruption and mismanagement is different. For instance, the National Audit Office and the PAC supervise the accounts, and we also pursue value-for-money studies and try to root out mis-spending or wasteful spending.
	However, that approach is not replicated in the rest of the EU, and in an intervention on the Minister I asked about the fact that the European Court of Auditors did not produce value-for-money studies. It is notable that all the emphasis in the EU is on making sure that the money is not being stolen, rather than on making sure that it is being spent effectively.
	I hope that the Government are willing to pursue such matters more vigorously in future. The "do less, better" approach is the one that we should adopt, but it is hard to believe that the Court of Auditors is doing so sufficiently vigorously. For example, on page 234 of the papers issued to hon. Members for this debate it is stated that the Court of Auditors budget remained at €84 million in 2003–04. It seemed to me that there was an opportunity in that period to "spend to save"—that is, to spend additional money in the Court of Auditors to make sure that money was spent more effectively elsewhere. In contrast, in the same period the budget for the European Parliament rose by 18 per cent., from €986 million to €1,166.
	How can we take seriously the suggestion that the European Parliament is determined to curb wasteful expenditure when its own spending has risen by 18 per cent., and when MEPs maintain the farce of commuting every month between Strasbourg and Brussels? How can the British public believe that the EU is seriously interested in safeguarding taxpayer's money, when no one in this country supports such wastefulness—apart from the Liberal Democrats, of course. [Interruption.] I note that that remark has been met with universal acclamation, and no denial even from the hon. Member for Richmond Park (Susan Kramer), the only Liberal present.
	Will we be given an opportunity to vote against this motion? It states only that the House "takes note" of these documents, but it seems a terrible waste of time to do the same thing year after year. It would be worth while for some hon. Members to vote against the motion, just to demonstrate that we are unhappy with the process. Presumably, the time will come when Parliament has an opportunity to vote against the EU budget and its extravagances, although I see that that possibility is well along the way to being rejected by the European Parliament. It has been reported that members of the Budgets Committee unanimously adopted a draft resolution yesterday that
	"formally terminates the current Inter-Institutional Agreement, allowing Parliament to keep more advantageous Treaty provisions as the sole basis"
	if talks on the next financial perspective fail.
	After agreement has been reached between national Governments, the European Parliament has decided that the amount of money being spent is insufficient. Again, the only support for that in this country will come from the Liberal Democrats. We will have to proceed with a budget that already contains substantial amounts of pork, overspending and waste, and the European Parliament and the Liberal Democrats want to spend even more. Can my hon. Friend the Minister tell us when we will have the opportunity to vote against that?

William Cash: Important as this debate is, it also demonstrates the cultural inadequacy of the way in which the European Union conducts itself. On the issue of how taxpayers' money is spent, we can look back with some pride on the fact that the Public Accounts Committee was set up under Gladstone. Nor does anyone have any serious doubt that the National Audit Office and the Public Accounts Committee do a thorough job in identifying inadequacies and, where necessary, maladministration or fraud in the UK.
	However, the report by the Court of Auditors on OLAF makes the following comments:
	"The Office's investigations policy is still uncertain . . . With regard to preliminary work . . . analyses are still rudimentary . . . Supervision of investigations by the Office's management has generally proved inadequate . . . The duration of investigations has not been brought under control . . . There is no system in place to measure investigators' actual workload or the time they spend on investigations . . . The obligation to report investigations that are more than nine months old to the Supervisory Committee has had no notable effect . . . It is still difficult to determine the actual results of investigations. In the area of internal investigations, little progress has been achieved since 1988 with regard to sanctions imposed."
	As I mentioned in an earlier intervention, the report also stated:
	"There is no independent control of the legality of investigative actions."
	That is an average catalogue of condemnation of the so-called efficiency of a body that was, as the hon. Member for Stroud (Mr. Drew) said, set up some seven years ago. That is what the Court of Auditors is still saying about it.
	The importance of that criticism is that OLAF is at the hard end of the so-called investigations of malfeasance in respect of taxpayers' money. We have heard reference before to the question of irregularities, and I gave some figures earlier, which I shall briefly rehearse again. In 2004, for the European Agricultural Guidance and Guarantee Fund there were irregularities of €82,064,000. On the structural measures, irregularities for that year totalled €531,744,438. The sum to be recovered was €357 million. The amount declared irrecoverable, pending a formal decision, was €15 million. Those are facts, and I take them from the official documents.

Ian Taylor: rose—

William Cash: I shall certainly give way to my hon. Friend, whether he comes from Venus, Jupiter or Uranus.

Ian Taylor: Will my hon. Friend also note, however, that the president of the Court of Auditors said that the court concluded that the 2004 consolidated statement faithfully reflected revenue and expenditure for the year and the financial situation of the Communities at the year end, save in respect of sundry debtors? The court went on to say that it had inadequate confidence in the way that member states were administering the budget for the common agricultural policy and structural funds. One needs to put in context what is causing the problem and what is not.

William Cash: I hear what my hon. Friend says, but I must mention again what I have said on a number of occasions. Indeed, I made a specific point in respect of the European Communities (Finance) Act 1995, when six of my colleagues lost the Whip, not over Maastricht but over European finance. I tabled an amendment to deal with the relationship between member states and the EU's financial management. In summary, I worked things out, spoke to the Comptroller and Auditor General and came to the conclusion that it was possible for the Public Accounts Committee and the National Audit Office to have much more direct control of the money administered in the United Kingdom as a member state.

Si�n Simon: Will the hon. Gentleman give way?

William Cash: I will not give way for the moment, if the hon. Gentleman does not mind.
	In other words, the accountancy principles applied in the UK by the PAC and NAO would then have been applied to EU finances in the member states. That seemed to me a rather good idea. I will not go into all the detail, but I had 45 Members, or thereabouts, ready to vote with me on that question, and it can be fairly said that I was given assurances that those matters would be fully considered. However, to this day, some 10 years and more later, I am still waiting to hear either from the Government or from Conservative Front Benchers that we will adopt those principles to get proper control over the money that is spent in member states.
	The Economic Secretary rightly said that such questions went to the heart of the EU's problems. My hon. Friend the Member for Rayleigh (Mr. Francois) rightly said that the whole question also related directly to the rebate, because the rebate is connected to financial management, and with the manner in which such operations are conducted. Furthermoreto refer to other contributionsit relates to the European aid budget for Africa, in which I have an interest, as the chairman of the all-party Uganda group and the vice-chairman of the all-party Kenya and Tanzania groups. I am deeply worried about corruption in Africa and the relationship between that and the manner in which the EU is failing to provide the kind of effective control and delivery in relation to financial management and the budget that we ought to expect.
	Such things are not simply technical questions, and this large stepping stone of papers that I have in my handsI can assure hon. Members that it is pretty heavycontains an enormous problem that goes to the heart of the way in which the EU operates. It does not work. It is ineffective. It is not operating even according to the terms that the Court of Auditors, or, indeed, the Government, present to us.
	The Minister referred to the question of nation states, and said that some rogue states might in future fail to carry themselves properly on these important questions. We already have the example of the stability and growth pact, whose rules it is perfectly obvious that people did not comply with. My hon. Friend the Member for Esher and Walton (Mr. Taylor) rightly pointed out that it is essential in matters of this kind that the rule of law be complied with. It is equally clear that there is no intention to do that, and several hon. Members have made the point that we have every reason to doubt whether there is any real desire or intent to carry through on compliance with the rules of the European Union.
	That calls into question the whole fabric, the whole system, the whole framework of the current European Union, which has led me to believe that the best way to act would be to have a form of associate status. I do not need to enlarge on that, having spoken about it on a number of occasions. At least, however, it would get us away from what I regard as a largely fraudulent approach to the European Union, which is to say that we want things to improve, while seeing almost no serious change taking place in spite of the fact that reforms are proposed in documents such as those before us that clearly have not been carried through. There are also the reforms of the Lisbon agenda, which again have been proposed but not carried through.
	We need to be quite transparent and decisive. We need to be honest with the British people about the deficiencies in the way in which the system functions. We must not roll out yet another fudge, year after year after year. We must tackle the problem. I challenge the Governmentand, indeed, my own Front Benchto be less reticent in their arguments. I do not mean this to refer for one moment to my hon. Friend the Member for Rayleigh, but there is a tendency for an eerie silence to descend on the European issue.

David Drew: Is not the problem the way in which we debate these issues in the House? It is not acceptable that these documents are merely to be noted.

William Cash: I agreeon which note, I shall sit down.

Angus Robertson: While I speak on behalf of the Scottish National party and Plaid Cymru, I want to make a number of points not yet raised from the perspective of the European Scrutiny Committee, on which I sit. Notwithstanding the sensible point made by the Minister about much of the problem that we have discussed being the fault of the member states, and notwithstanding the excellent point made by the hon. Member for Esher and Walton (Mr. Taylor) about the scale of fraud being less than that of benefit fraud in the United Kingdom, we agree across the House that some serious issues need to be dealt with when we consider the situation, warts and all.
	The context of the fraud should not be overlooked. A series of senior officials involved in audit and financial management have suffered personallya point I made to the Minister earlier in an intervention. Those are people who brought maladministration and financial mismanagement to light, and they cannot all be publicity seeking cranks. There are serious questions about the governance of OLAF, which was, as hon. Members will recall, instrumental in bringing about the arrest and detention of one Mr. Hans-Martin Tillack, a Stern journalist who had published articles critical of financial management in the Commission. According to evidence given to our sister Committee in the Lords in 2004 by the chairman of the OLAF supervisory committee, that raid was triggered by hearsay evidence from one informant in the public relations office of the Commission, and a witness thought that any normal person would have to say that OLAF was
	probably trying to get back at this man.
	That is not an isolated case, because similar events have occurred in a series of cases. The fraud issue is serious and improvements need to be made.
	The financial changes outlined by the Minister are supposed to be integral to the Commission's reform programme. That matter was discussed in the European Scrutiny Committee only last week, when the Government's reaction was described as supine and unquestioning, which is a serious comment. The hon. Member for Leicester, East (Keith Vaz) has said that he is content with the standard of benchmarking, but the Committee does not think that the Commission's benchmarking proposals on the reform programme are adequate. In particular, the Committee has noted
	the almost complete absence of any quantification of the results said to have been achieved, and even of any kind of external independent evaluation.
	The Government need to raise that serious shortcoming in the Council of Ministers.
	On the budget being qualified for 11 consecutive years, it is ludicrous that the Commission aspires to becoming a leader in the field of public sector financial management, because it has a long way to go. The situation is unacceptable and it must be addressed.
	In the previous Parliament, the European Scrutiny Committee pointed out the weaknesses in protection in the revised EC staff regulations for officials bringing maladministration and wrongdoing to the attention of EU institutions and the public. The Minister would be right to say that the situation in the EU institutions compares unfavourably with the rule in the civil service in the UK, where a protected disclosure could be made by any Minister of the Crown. The UK Government can and should do something in the Council of Ministers, and they should not respond to such documents in a way that Committee members from both sides of the political divide have described as supine and unquestioning.
	I am not EuroscepticI believe passionately in the European Union, I am in favour of the reform of the European Union and my position on the common fisheries policy is well known in this House. However, unless we examine the challenges, describe them for what they are and do something about them, we will have the same debate for another 11 years, in which case trust in the EU institutions, which are worthy, will continue to plummet.

Robert Goodwill: I was fascinated to hear the Economic Secretary say that he believes in the EU. I know that it is in vogue to take direction from an overarching authority, but the EU is something in which I believe, in so far as it exists, but I do not believe that it has a coherent system of financial accountability.
	I must declare an interestas someone who farms modestly in Yorkshire, I am eligible for my share of the 43 billion out of a total of 100 billion. Little has been paid incorrectly to farmers this year, because little has been paid at all. The Department for Environment, Food and Rural Affairs system is so complex that it rules out the possibility of fraud, but DEFRA has so many officials that it probably wastes an equivalent sum on administrationthere are now more DEFRA officials than there are dairy farmers in England.
	Until 2004, I was a Member of the European Parliament, where, as a member of the Environment Committee, I was budget rapporteur between 2002 and 2004. A particular bugbear of that Committee was the way in which the LIFEthe financial instrument for the environmentthird countries programme is administered. The programme is for environmental projects outside the EU and the Committee was especially concerned about financial probity in relation to money deployed in the west bank and Gaza strip. I did not look to see whether it was referred to in the documents because I know that the Commission had difficulty finding an inspector who was prepared to go and look at those projects, but it is a concern.
	Last November, once again the European Parliament enacted what has become an annual ritual by refusing to sign off the EU's accounts for the 11th year running. It is almost as predictable as the arrival of Alsatian asparagus or Beaujolais nouveau that the European Court of Auditors will deliver a negative statement of assurancea phrase reminiscent of deferred success. We have been deferring success in this area for 11 years.
	As the Minister rightly said, 80 per cent. of the budget is deployed by member state Governments, and the blame for many of the more blatant fraudsfor example, those involving olive trees in Italy or flax in Spainshould be laid fairly and squarely at the door of the Governments involved, but not all of the money unaccounted for has been misappropriated. Attention was drawn to the UK's sheep annual premium scheme, for example. There was no suggestion that farmers misappropriated every single penny in the scheme, but the system in place before sheep were individually tagged meant that sheep could be counted twice by inspectors on different days. Such infringements were few and far between, but the system was not sufficiently robust to rule out the possibility of fraud. My hon. Friend the Member for Esher and Walton (Mr. Taylor) drew a parallel with the housing benefit system in the UK, but I do not think that the comparison is fair. We are talking about money given to 25 member states and a small number of NGOs, which is not the same as distributing large sums among large numbers of individuals.
	Some EU funds are spent in a way that I believe is diametrically opposed to the wishes of the British peoplefor example, we spend 1 billion a year on subsidising the growing of tobacco, much of which is low quality and has to be sold on to third-world marketsand some of the money is wasted. Hon. Members who have perused the documents will have found on page 245 a reference to the Committee of the Regions. It is noted that the Committee has not been able to fill the auditor's post on a permanent basis. There is a story behind that. The Committee has 317 members from across Europe, each of whom costs 147,000that figure does not include salaries. I discovered that fact by accident. When I was discussing another report in the European Parliament, it emerged that the Committee of the Regions also discussed reports, but no one listened to what it said. Is that Committee good value for money? Do right hon. and hon. Members receive feedback from their Committee of the Regions representatives? Do they even know who their representatives are?
	When the financial auditor of the Committee of the Regions drew the Court of Auditors' attention to problems associated with members' travelling expenses during a meeting of CoCoButhe Committee on Budgetary Controlthe matter was played down by the auditors. Not until Members of the European Parliamentin particular Michiel van Hulten, a Socialist MEP from the Netherlands, and Chris Heaton-Harris, a Conservativedrew attention to it did those events emerge.

Mark Francois: May I take this opportunity to place on the record the fact that Chris Heaton-Harris has been absolutely tireless in pursuing fraud and waste in the EU on behalf of the British taxpayer? I have worked closely with him and I commend the work that he has done on behalf of the people of this country.

Robert Goodwill: I endorse my hon. Friend's comments.
	Whistleblowers have a sad record in the EU. Paul Van Buitenen, who exposed the fraud that brought down the Santer Commission, was sacked by Commissioner Kinnock, now the noble Lord Kinnock. Incidentally, Mrs. Cresson, who was criticised for giving money to her dentist and whose pension was suspended, is now on half-pension, we are told.
	Marta Andreasen, the first qualified accountant to be employed as chief accountant by the Commission, refused to sign off the accounts for the previous year when she was appointed. She was suspended by Commissioner Kinnock. In fact, I think it is scandalous that a Labour commissioner sent officials scurrying around Brussels in taxis issuing suspension notices to their employeesshades of Militant, dare I suggest. Marta Andreasen said that there were no systems in place to make sure that money was spent properly and that a double accounting system should have been in place.
	I am proud that Paul Van Buitenen went to Edward McMillan-Scott, a British Conservative MEP, and that Marta Andreasen went to Chris Heaton-Harris, another Conservative MEP. It is Conservative Members of the European Parliament who have been taking the lead in the fight against fraud. I am sure that when we form our new group with allies from eastern European countries, we will be even more effective in taking that forward.
	Most recently, Dorte Schmidt-Brown raised concerns about EUROSTAT, the EU statistical service. It systematically siphoned off 3 million and kept two sets of books at its headquarters in Luxembourg, but no one was fired. All the staff concerned were redeployed and are now either still employed or drawing their pensions. As the new chief accountant of the European Commission, Brian Gray, has said, one can change the system, but it has proved impossible to change the culture. There is an environment of complicity. Why rock the boat when every whistleblower is suspended? If people keep quiet, they will keep their jobs.
	I have a practical suggestion for the Minister about benchmarkinga term that I do not really like. It would be very useful when monitoring what is going on with the finances of the EU if each directorate-general of the Commission were individually to measure progress. The present system of issuing a positive or negative statement is too broad a brush. We would get much more value from more detailed information from the directorates-general.

Ivan Lewis: With the leave of the House, I shall respond to the debate.
	Elements of the debate have been goodI wish I could say that the whole debate had been good. [Interruption.] I will not name the elements that have been good and the ones that have been not so good, but I am looking carefully at the Opposition Benches. The debate is important and it is probably good that it has taken place on the Floor of the House rather than in Committee, which has not happened for a considerable time. It is important that the issues are aired transparently.
	I will try to respond directly to the different issues and questions that were raised by hon. Members. The hon. Member for Rayleigh (Mr. Francois) basically claimed, as he did before we concluded the negotiations, that the deal that the British presidency secured on the financial perspective was in some ways bad. That is complete nonsense. For the first time, the United Kingdom is paying roughly the same as France and Italy. The budget is generally on a downward trend. The abatement will be worth more in the next period than in this and a process now exists to lead to the necessary reform of the common agricultural policy. We would settle for all those elements as a fair and reasonable agreement on the financial perspective. Many people believed that the British presidency would not be able to secure a deal on the financial perspective and the Conservative party was desperately disappointed when we achieved that.

Mark Francois: Will the Minister give way?

Ivan Lewis: No, I will not.
	The hon. Gentleman also asked me about the Government's opinion on when the accounts will be 100 per cent. cleared. It is the Commission's stated objective that the qualified assessment will be removed by 2009. We think that it is good that the Barroso Commission has set itself that target and we welcome that, but we cannot be sure that all the necessary measures will be in place to achieve it. There is still a lot of work to be done before we can be sure that it will be achieved.
	The hon. Gentleman asked for an update on the progress of accruals accounting. I have become an expert on accruals accounting in recent times and there is good news. The Commission successfully met the deadline to implement the new system in January 2005. The transition to the new system was successful and there is an ongoing process to develop that system. The European Court of Auditors queried whether the production of the 2005 opening balance would be ready in time. The Commission assures us that it is on track.
	The hon. Gentleman asked also what would happen to the debt-for-GDP ratio if off-balance-sheet figures are taken into account. I think that he was expecting me to write back on the matter. I apologise for the letter not having arrived. The Office for National Statistics classified public debt based on agreed national accounting rules, SA95. It is nonsensical to add contingent liabilities to GDP calculations as they do not apply to other member states. There is no figure with which the UK could make a comparison, nor is there any implication in relation to stability and growth. The issue is not relevant.
	The hon. Gentleman asked whether the abatement concession was included in figures for the United Kingdom's contributions that were published in the pre-Budget report and whether it would be included in the figures for the Budget. As far as we are concerned, the PBR was in line with the code for fiscal stability, which as always contained cautious assumptions, a point which I made to the hon. Gentleman at the time. From memory, the negotiations at that time were ongoing. Therefore, any assumption would be an assumption. We were cautious. The figures will be updated now in the usual way at the time of the Budget.
	The hon. Gentleman asked also for some examples of how the road map objectives would be achieved. The major actions that will improve assurance are improving internal controls in the Commission and in member states to the standards that are proposed by the European Court of Auditors, promoting further simplification of complex legislationthe ECA says that this will lead to improvementsreaching a political agreement with the European Parliament on the level of risk that is tolerable, and introducing greater involvement of national audit offices. As many Members have suggested, our NAO is very willing to help in that regard.
	I have tried to address all the specific issues raised by the hon. Gentleman. My hon. Friend the Member for Luton, North (Kelvin Hopkins) spoke for the 11th successive year on these issues. He made an informed and intelligent contribution, but I cannot say that I agreed with everything that he said. That may come as a surprise to right hon. and hon. Members. However, my hon. Friend tried to make a constructive contribution.
	I hope that the career of the hon. Member for Richmond Park (Susan Kramer) will not suffer as a result of her enthusiastic support for the recent unsuccessful leadership bid of the hon. Member for Eastleigh (Chris Huhne). The hon. Lady asked about some important points, including the Commission having an appropriate system of accountability. The directors-general of the Commission already sign declarations of assurance. From now on the Commission's chief accountant will sign off the accounts. That is a further strengthening.
	The hon. Lady asked also about the National Audit Office and what the United Kingdom might do. We were the first member state to provide a response to the annual report of the ECA. That is a process and obligation that is now in the EU's financial regulation. We have already cleared the way to support the idea of management level declarations. We were fully prepared to support this at Council. We are certainly interested in making better use of the NAO to audit our management of EU funds.
	We did not make the level of progress that we would have liked on that because many member states did not feel able to support that approach. That is because they have highly federal or regional structures. The UK has a pretty impressive record in recent times in trying to drive the agenda forward during our presidency and also in making contributions in Council whenever possible.
	The contribution of my hon. Friend the Member for Stroud (Mr. Drew) was thoughtful and constructive. He is frank about his scepticism. Most of the time it is a balanced scepticism. I think that he conceded that there has been some progress in recent times although he feels that there has been nowhere near enough progress. That is a reasonable point to make.

David Drew: Given the words in the Order Paper, on which we may either be voting or not this evening, what progress will the Government make through the Economic Secretary to ensure that the criticism that has been voiced on both sides of the Chamber is taken seriously and that the fraud issues to which he has referred have been taken up?

Ivan Lewis: When I realised that one of my responsibilities during the past few months was linked to the EU budget for 2006 and the question of audit, I made it clear that we would be proactive in regarding this issue as a priority during our presidency, which we tried to make it. Commissioner Kallas felt that the UK presidency was crucial in making the road map proposal work. Beyond the UK presidency, we now have to take a lead role in maintaining the pressure on these issues if we are not to come back here year after year and hear the same old story. I will give my hon. Friend a commitment that, in my role, I will continue to take this issue seriously. I know that the Chancellor, in his contribution in ECOFIN meetings, as he always has been in this country, is constantly concerned about making sure that financial probity is central.
	I come to the contribution by the hon. Member for Esher and Walton (Mr. Taylor). He always makes well-informed, measured, sensible contributions on this and many other issues. I am sorry to damage his career even more than it has been damaged in recent years by the honourable positions that he has taken on these issues. They have been honourable because anybody in the Conservative party who has taken a balanced view on Europe has seen his career suffer as a consequence of those judgments. All too often, it has been easy to pander to a gallerythe Eurosceptic galleryand give a false, out-of-context impression of the European Union. The hon. Gentleman has always resisted doing that in the same way as the right hon. and learned Member for Rushcliffe (Mr. Clarke) has, which is one of the reasons why he never became Leader of the Conservative party and why it chose such excellent leaders during the past few years as alternatives.
	As for the Mars and Venus analogy, I shall leave it to Members to decide who is in which category. Perhaps they can discuss that later. I assure the hon. Member for Esher and Walton that the Government will continue to exert pressure on these issues, because anybody who believes in the vision and concept of the European Union knows that it is essential that we make progress on this in terms of the credibility and integrity of the EU and the relationship it has with its taxpayers. If we do not make progress on this, it will be a stick for sceptics to beat the European Union with year after year. They will deliberately present this out of context.
	My hon. Friend the Member for Glasgow, South-West (Mr. Davidson), who was very well informed on these issues, said that I had spoken at length and was not all wrong. I am not sure whether that will do me much good, but I regard it as a major compliment from my hon. Friend. I have already explained what I believe the achievements of our presidency were on these issues. I do not think the road map would have been taken forward if we had not prioritised it in our presidency. However, it is the beginning of a process; the delivery of it will make all the difference. My hon. Friend also expressed concern about the culture of the European Union. We have to find it encouraging that there are signs within the new Commission of a different culture that takes these issues seriously and understands the great challenges that lie ahead, whether they are globalisation or the gap that has grown in recent times in the relationship between the European Union and the citizens of Europe. I believe that there is some encouragement in the attitude of the new Commission in understanding that there has to be cultural change.
	My hon. Friend also asked when the UK Parliament will have an opportunity to vote against the EU budget. I shall turn that into on the UK budget, which is a more objective view. In accordance with our procedures, a European Community finance Bill will be an opportunity to vote on these issues.
	The hon. Member for Stone (Mr. Cash) made a contribution that reinforced his prejudices. He has always been honest about these issues. He wants the United Kingdom to adopt a form of associated status in the European Union. Long may he continue to speak loudly and clearly on these issues at every opportunity, and long may he be an example of how any appearance that the Conservative party is moving to the centre of politics, whether in this country or internationally, is mere pretence. They are as right-wing and ideological as everthe hon. Member for Stone is proudly nodding his headwhich I am sure will become clear in the months and years ahead.
	The hon. Member for Moray (Angus Robertson) talked of the importance of exposing fraud while not targeting whistleblowers who give information. As I said, I cannot comment on individual cases or circumstances, which would be entirely inappropriate, but the first thing that anyone in an organisation should do is to report any suggestion of fraud or maladministration to management. If they do not take the information seriously or try to cover it up, there is legitimacy in the person feeling obliged to make it public knowledge, in many cases. Whistleblowers have played an honourable role in bringing to the public's attention all sorts of maladministration and fraud.
	The hon. Member for Scarborough and Whitby (Mr. Goodwill) intervened to ask me why farmers had not been paid any money recently, but did not tell me that he was a farmer. My response might have been very different had I known that self-interest was to the fore.
	The debate has been useful. It has shed light on issues that we do not often discuss in Parliament. The matter is at the heart of the relationship between the European Union
	It being three hours after the commencement of proceedings on the motion, Mr. Deputy Speaker put the Question, pursuant to Order [6 March].
	Question put and agreed to.
	Resolved,
	That this House takes note of European Union Documents No. OJ C 301, the European Court of Auditors 2004 Annual Report; No. 11216/05, European Court of Auditors Special Report No. 1/2005 concerning the management of the European Anti-Fraud Office; No. 11452/05 and Addenda 1 and 2, Protection of the financial interests of the Communities: fight against fraud, Commission's annual report 2004; No. 12493/05 and Addendum 1, Commission Report: follow-up to 2003 Discharge DecisionsCouncil recommendations; No. 12494/05 and Addendum 1, Commission Report: follow-up to 2003 Discharge DecisionsEuropean Parliament Resolutions; No. 12712/05, Commission Staff Working Document: follow-up to the 2003 European Court of Auditors Annual Report; and No. 13532/05, Member States' replies to the Court of Auditors 2003 Annual Report; and supports the Government's promotion of measures to improve the level of assurance given on the Community budget.

EUROPEAN UNION DOCUMENT

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

Strategy for the Protection and Conservation of the Marine Environment

That this House takes note of European Union Documents No. 13759/05, and Addendum 1, Draft Council Directive establishing a Framework for Community Action in the field of Marine Environmental Policy (Marine Strategy Directive), and No. 13700/05 and Addendum 1, Commission Communication: Thematic strategy on the protection and conservation of the marine environment; and agrees with the Government's view that there is considerable uncertainty over the benefits, costs and effectiveness of the proposed Directive.[Mr. Watts.]
	Question agreed to.

CHILDREN WITH ASPERGER'S SYNDROME (WARRINGTON)

Motion made, and Question proposed, That this House do now adjourn.[Mr. Watts]

Helen Jones: Last autumn, I visited a group in my constituency called WASPS. It was one of the most enlightening and humbling visits I have ever made. WASPS stands for the Warrington Asperger's syndrome parents support group and when I listened to what those parents told me I was sometimes close to tears. I hasten to add that that was not because they were moaning about their lot, or complaining about the hand that life had dealt them; they were simply telling me about the day to day realities of living with a child with Asperger's syndrome and about their struggle to access even the most basic services.
	Those parents cope every day with things that would bring most of us to our knees. They deal with stresses and strains that those of us fortunate enough to have healthy children who do not have major problems can hardly imagine, yet in my area they receive little support. I think that is because much of what they do is hidden, and helping them and their children does not seem high on anyone's list of priorities. I hope that this debate will at least help to give the problem higher priority.
	Asperger's syndrome is a complex condition and I admit that since last autumn I have been on a steep learning curve. It has many traits in common with autism, including difficulties in communicating and in dealing with social relationships and sometimes a lack of imagination, although Asperger's syndrome children often do not experience the same difficulties in communication as many children suffering from autismfor example, they may speak fluently although they can often sound stilted or formal. Nor do children with Asperger's syndrome necessarily have the learning difficulties experienced by children with autism; in fact, they are often of average or even above-average intelligence. One of the ladies in the group told me that her son had recently gone to university. There is vast potential in such children, which can be brought out if they have the right support, especially at an early age.
	Unfortunately, however, because Asperger's syndrome covers a wide spectrum and the disability may not be as obvious as autism, it is often a long time before the condition is recognised and diagnosed. I am told that parents often feel a sense of relief when they finally receive a diagnosis, because at least they know what the problem is. Unfortunately, however, they have to do a great deal to learn to cope with their child's complex needs and access services, often with very little support. I was astonished to find, for instance, that in my constituency parents are often given a diagnosis, then simply told to go away and read a book or join a support group. They are not told which services could help them or how they could obtain them. That is appalling, especially as those families are under a great deal of strain.
	My local group carried out a survey of its members, and it found that 73 per cent. of parents had suffered depression since the birth of their child. More than 90 per cent. thought that they needed counselling or psychological support at some stage, but very few of them received it. Only 50 per cent. obtained any support at all, often in the form of a one-off intervention or for a very short time. The survey revealed that 65 per cent. of parents suffer regular sleep deprivation. We know what we are like after missing a night's sleep, so we can only imagine what it is like to endure that week after week. That, however, is the reality for many of those parents. A total of 85 per cent. thought that their career choice or their ability to work had been restricted because of their child's needs.
	There is a strain on relationships, and siblings in the family can be affected. The Under-Secretary of State for Health, my hon. Friend the Member for Don Valley (Caroline Flint) takes a great interest in these matters, and I am sure that she would find the comments of parents in that group as distressing as I do. One mother, for instance, said:
	My daughter has started to copy behavioural tantrums and arguing because that is what she sees.
	That mother has not been offered any counselling. Another mother talked about the relationship between her son and her other children:
	They are upset by what he does, he hits them quite badly at time; their behaviour is a lot worse when he is being difficult.
	There is very little help available for those families but, in my experience, they are exactly the sort of people whom the Government say they want to support. We say that we want to support hard-working families, and I can think of few families who work as hard or who are as deserving of support. We would not dream of telling someone with a physical problem to go away and read a book or join a support group. We would not leave them in that position, and it is not acceptable for those children either. That is not what the Government intended when they drew up Every Child Matters and the national service framework for children. In those initiatives we talked about integrated children's services and clear care pathways for children, but they do not exist for those children in my constituency. Their parents have lobbied patiently and with commendable courtesy to try to improve things.

Liz Blackman: Will my hon. Friend give way?

Helen Jones: My hon. Friend has great expertise in these matters, so I am happy to give way.

Liz Blackman: It is no coincidence that Asperger's syndrome and high-functioning autism are labelled hidden disabilities. There is good practice, but it is patchy. The Government face an enormous challenge in making sure that the culture of every organisation that could make a contribution to support both families andchildren develops and changes so that those organisations become far more effective and responsive to all families who face that particular disability.

Helen Jones: My hon. Friend is right. It is sad that good practice is not spread as widely as it should be. Before Christmas, I held a meeting with parents' representatives and representatives of the primary care trust and of the local council to discuss the problems. It emerged from that meeting that educational practice is different in different schools. It is often a question of training, yet the local authority representative pointed out that while she could offer training courses, it was for head teachers to decide whether their special educational needs co-ordinators should attend them.
	In its current inquiry into special needs, the Select Committee has found that a great deal more training is required, both in initial teacher training and in continuous professional development. I hope my hon. Friend the Minister will take that message back to the Department for Education and Skills.
	Although some parents were full of praise for the help that they had received from their child's school, others had had to struggle to get every bit of support that was given. Again, that raises questions not only about the monstrous waste of potential that is occurring, but about the implementation of Government policy on the ground. When we dealt with admissions in the report, I remember the Select Committee stating that fairness in public policy ought to be not a matter of luck, but a matter of course. The same applies to special needs.
	Parents also highlighted the problems they have in accessing the health service. I know that the Government have done a great deal to try and improve services for children suffering from autistic spectrum disorders, but what they wish to achieve is not always carried out in practice. Even when parents in my constituency can get assessments for their children, they often have to wait up to 12 months for some intervention, such as speech and language therapy or occupational therapy. It is even more difficult for them to access the child and adolescent mental health services. In my area those are provided by the Five Boroughs Partnership NHS Trust, but the PCT is commissioning only the tier 3 services, partly for historical reasons, at 25 per cent. of what is recommended in the national service framework. That means that CAMHS tend to intervene only when a child reaches crisis pointfor example, when the child is self-harming. If we had earlier intervention and proper care pathways, it is my firm belief that not as many children would reach that crisis, and the strain on families would be much reduced.
	What the parents are seeking, and I agree with them, is to ensure that when a child is diagnosed with Asperger's syndrome, they are allocated a key worker or a lead nurse who can help the family access the services that they need, whether in health or in education. We should ensure as well that when that diagnosis takes place, there is a proper assessment of the child's needs and what therapies they will require. Each child is different and requires different interventions. That may be speech and language therapy or occupational therapy. They may need some input from CAMHS, not because the child is suffering a mental illness, but because they need cognitive behavioural therapy, for example, or some other psychological support.
	That support needs to be sustained over time. Short-term interventions are often of very little help to children with Asperger's syndrome. They need sustained intervention, yet not only can people in my area find it difficult to access the higher level of services, but it is difficult for them to get even tier 2 services. The primary care trust tells me that there is a multi-agency group looking at services for children with personal, emotional and behavioural problems. We have a lot of groups looking into things, but what we do not have is a service. Part of the reason is that the PCT does not treat the matter seriously enough.
	I referred earlier to the meeting that I held. At that time the chief executive of the PCT was unable to attend because she was ill, but getting somebody else there was like drawing teeth. Although I wrote to the PCT following that meeting and it told me what it is doing with tier 2 services, nearly three months later the PCT still has not answered my question about key workers. It still has not answered the question about linking up our education and health services more closely. If we could get such services in place, we would make it much easier for children to achieve, we would reduce the stress on their family and siblings, and in the end we might even save money. We could do it in education as well.
	Why is it often the case that when a child is given a diagnosis their parents still have to go through the whole statementing process to get them the support that they need in school? They do not want to do that. They have had a diagnosis, and that should trigger the educational interventions automatically. We are wasting money on the vast bureaucracy of statementing that should be spent on assisting these children.

Betty Williams: I apologise for not forewarning my hon. Friend that I hoped to intervene and thank her for allowing me to do so. She says that services are patchy across the country. Does she agree that the key to any success that will help parents and their children is to have joint partnerships between education, social services and health? Has she met parents who have been called into a case conference to discuss the future of their child or, in some cases, children? They find that a very traumatic experience; I speak as someone who has been in that position. Somebody somewhere needs to take that on board.
	Does my hon. Friend agree that local education authorities sometimes deliberately hold back on statementing a child because they know full well that once that happens the parents are able to demand the proper services for them?

Helen Jones: I agree that we need much more co-ordination of services. The real problem for parents is that they are having to deal with so many different people. That is why a key worker and a proper care pathway are crucial in getting the services that children need.
	I know that my hon. Friend the Minister is sympathetic to what I am saying and takes these issues seriously because she has had to deal with them in her own constituency. I believe that there is a real need to support these families and to ensure that their children get what for our children is a basic entitlementthe right to develop their full potential. We should ask ourselves, Would this service be good enough for my son or daughter. I have to say that in my area, it is not. I hope that my hon. Friend will at least be able to signal that we will soon see some improvement and these children will get what others regard as a basic right.

Caroline Flint: I congratulate my hon. Friend the Member for Warrington, North (Helen Jones) on securing this Adjournment debate on services for children with Asperger's syndrome in Warrington. I welcome the contributions made by my hon. Friends the Members for Erewash (Liz Blackman) and for Conwy (Mrs. Williams). I also welcome the work of the all-party group on autism.
	It is important that, when the Government are developing policies that encourage good practice we hear about what happens on the ground. Part of our job is to identify good practice and, as my hon. Friend the Member for Erewash says, to find a way to share it to ensure that families who are coping with the special needs of their children can be supported.
	Families are at the heart of all aspects of that support. Parents are incredibly important in terms of whether the policies that we provide on health or education, in local government or national Government, will work. The partnership between agencies and parents, with children involved too, can make or break a particular service. As we all want to ensure that resources are used well, it is worthwhile looking at how that partnership can secure good value for money. I acknowledge the contribution made by parents, as an unpaid resource, to supporting children with a whole range of special needs. My hon. Friend poignantly identified some of the problems faced by parents of children with Asperger's syndrome.
	I am also aware that my hon. Friend is a member of the Select Committee on Education and Skills, which is conducting an inquiry into special educational needs, and that she is one of more than 300 Members of Parliament who have signed the manifesto of the all-party group on autism.
	In the past decade, we have all experienced a change in how we think about the delivery of services. Indeed, children and young people with autistic spectrum disordersASDincluding Asperger's syndrome, provide a test case for whether services are working together. Clearly, my hon. Friend feels that they are not working as well as they could in her part of the country. Those children's difficulties require input from health, social services and the education service. As my hon. Friend the Member for Conwy said, it is important that the different organisations work together. We are encouraging that discussion across Government, but, as hon. Members have asked, what are the practical results of those discussions?
	The large increase in the number of children identified with ASD, including Asperger's syndrome, presents considerable challenges for local providers. For many generations, the difficulties and problems that those children and their families face were not even acknowledged. We recognise the challenge and, in 2002, the Department and the Department for Education and Skills published good practice guidance on ASD.
	For such specialist provision, the ASD good practice guidance recommends a regional approach. The north-west special educational needs regional partnership, which includes Warrington, is one of the England-wide partnerships that have focused on provision for children   with ASD. A partnership is helpful in such circumstances because it means that one can not only examine the cash and specialist resources and ascertain what one can deliver, but discuss and share good practice. The latter is one of the main aims of such partnerships. I welcome that.
	A key to good provision, which the guidance highlighted, is co-operative working between services. We have shown how that can happen through the autism exemplar, which we published in the national service framework for children, young people and maternity services. It sets national outcome standards for health and social services and, importantly, their links to education. The exemplar shows the pathway for one young boy, starting at the age of three, as he moves through to post-16 provision. It begins with initial concern and identification through multi-agency assessment and diagnosis and moves to the various forms of support, whether social services support or specialist education provision.
	All local services should aim for such provision for children with ASD. I shall ensure that all comments about education are passed on to the appropriate Minister in the Department for Education and Skills. The exemplar focuses on a child with autism, but children and young people with ASD, including Asperger's, should benefit from the improvements that the Government are bringing about through their general policies for children and young people.
	Through the Every Child Matters change programme, we are bringing together education and social services locally under one director of children's services. Again, I stress that such joined-up thinking can occur and I hope that, when we provide training and support for special educational needs co-ordinators, head teachers understand that that can help their school's management, their relationships with parents and the children's achievement, which, as my hon. Friend the Member for Warrington, North said, can reach university level. If families feel that the children are getting a chance to fulfil their potential, that brings hope.
	Every Child Matters promotes common commissioning and funding through children's trust arrangements and integrates services for children and families in children's centres and full-service extended schools. In our White Paper, Our health, our care, our say: a new direction for community services, we set out that, for disabled children, children with complex health needs and those in need of palliative care, we want primary care trusts to ensure that the right models of service are developed by undertaking a review of their capacity and the delivery of integrated care pathways to meet the children's national service framework standards.
	Primary care trusts must also agree service models, funding and commissioning arrangements with their strategic health authorities. Of course, the needs of every different child with Asperger's syndrome may be different. However, I take on board my hon. Friend's point about examples of where the position has reached crisis point. That prompts the question of whether better understanding of the child's needs and an appropriate care pathway would have been not only more effective but, in the long run, more cost effective for the support for that child and his or her family.
	We intend to follow this matter up in the autumn, in the refreshment of the NHS priorities and planning guide, which sets out the must do requirements for inclusion in local delivery plans. The Under-Secretary of State for Health, my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Byrne) is meeting PCTs, health service providers and national bodies on 15 March to look at how we can ensure that the complex pathway of care for disabled children and those with complex health needs is translated into the reality of purchasing better services. I can assure my hon. Friend the Member for Warrington, North that I shall ensure that my colleague has full sight of the report of this debate.

Betty Williams: Does my hon. Friend acknowledge that the important step that a child takes when leaving school and going into further education, or wherever the path might lead, is crucial? At the moment, that is where the weakness is. Education, social services and prospective employers do not seem to be working together for the benefit of those children and young people.

Caroline Flint: There has long been a problem for children with special needs, in relation to their transition from children's services to adult services and the adult world. We are attempting to improve that position, certainly in mental health services, and considerable work has also been done in social services. I agree with my hon. Friend, however, that more needs to be done. Young people with degrees will be valuable members of whichever work force they enter, and it is important to ensure that people, whatever their disabilities, can have a crack at having as independent and fulfilling a life as possible. I shall pass on the point that my hon. Friend has raised about the transition from childhood to adulthood. We identified earlier the support that we wanted to give to children and young people. We do not want to see all that investment lost if, in adulthood, they are unable to use that support to good effect as they grow older.
	I am aware that Cheshire and Merseyside strategic health authority has proposed the retention of a single PCT for Warrington. I am advised by the SHA that the PCT has well-established joint working with Warrington council through the health and well-being partnership. I understand that Warrington council sees provision for children with ASD, including those with Asperger's syndrome, as an area of development. It recognises that this is an area that has more potential in regard to delivery.
	I know that the local authority is also exploring developing its specialist provision in its schools for those with ASD. The development of a range of educational provision for children with ASD is encouraged by the ASD good practice guidance. However, the PCT recognises the need to work more closely with Warrington council, and it intends to strengthen joint commissioning for mental health, learning disabilities, children, older people and child and adolescent mental health services, with a view to improving them.
	I am aware that my hon. Friend the Member for Warrington, North has been raising concerns locally about the provision of services to children with Asperger's syndrome, and that she has met representatives of the Warrington Asperger's support group, and of Warrington PCT. I understand that, following that meeting, the PCT wrote to her about the development of a new tier 2 service, which will provide a service for children and young people whose symptoms and/or behaviours are indicative of an emotional or behavioural problem. That would include children with Asperger's syndrome. The service will be delivered in line with standard 7 of the children's national service framework and Every Child Matters by a multidisciplinary team. I am further advised that Warrington PCT has prepared a local delivery plan bid for a key worker role to support young people with a suspected diagnosis of autism, including Asperger's syndrome.

Helen Jones: I am pleased to hear what my hon. Friend is saying, but will she ensure that the PCT, in doing these things, communicates with the parents of children with Asperger's syndrome? As she has rightly said, they play a key role in developing these services, but so far as I am aware, the PCT has not even let them know that it is putting in a bid for a key worker.

Caroline Flint: I am sorry to hear that, as I have obviously been authorised to announce that in this public forum. I hope that there will be a constructive relationship between the PCT and the parents of children with Asperger's syndrome. This is part of recognising the partnership that I mentioned earlier.
	There will always be more to be done. The whole range of autism presents a number of complex issues, but some are not beyond resolution: as was pointed out by my hon. Friend the Member for Erewash, there are some excellent examples of very good work.
	I urge my hon. Friend the Member for Warrington, North to continue to involve local stakeholders in discussion on the best way of helping services locally. I hope to see not just enthusiasm, but recognition that talking about the issues, listening to accounts of the problems and finding practical solutions is all that families really want.
	Question put and agreed to.
	Adjourned accordingly at twenty minutes past Eight o'clock.